June 29, 2011 / 7:49 AM / 8 years ago

CORRECTED-UPDATE 3-Star shoemaker Ferragamo shines in Milan debut

(Corrects share price move to 9.8 pct from 8.9 percent in second paragraph)

* Shares up almost 9 pct from IPO price

* Ferragamo 1st IPO completed in Milan this year

* Ferragamo received bids worth 3.6 times offer

* Follows IPO of Italian peer Prada in Hong Kong

(Adds analyst, valuation, details)

By Antonella Ciancio

MILAN, June 29 (Reuters) - Shares of Italian luxury shoemaker Salvatore Ferragamo rose more than 8 percent in their first day of trading on Wednesday, defying investors’ concerns that its price tag was too high given volatile markets.

The Florence-based maker of shoes worn by Hollywood stars, such as Audrey Hepburn and Greta Garbo, traded at 9.8 euros by 0928 GMT, which compared with the initial public offering price of 9 euros per share. The blue-chip FTSE MIB index gained almost 1.7 percent.

“We have faced difficult moments on the equity markets, but we made it,” Chairman Ferruccio Ferragamo said at a crowded ceremony marking the launch of trading on the Milan bourse, which was decked with black and white pictures of legendary Hollywood stars including Sophia Loren and Marilyn Monroe.

Milan fund managers said Ferragamo had benefited from a launch when markets were more optimistic about a crucial Greek austerity plan getting parliamentary approval. Passage would secure more aid for Greece from international lenders and avoid a default.

“But this is the first day, which is usually affected by speculation. Let’s see what happens in coming days,” said one fund manager.

“Ferragamo is not a dominant player and I’m doubtful on the outlook. Its targets look aggressive,” he said.

The shares had been priced at 9 euros each in the initial public offering (IPO), at the middle of their flotation range, valuing it in line with the group’s European peers.

Ferragamo’s 9 euro offer price puts it on valuation of 18.3 times projected 2011 earnings, at a slight discount to luxury goods maker LVMH which trades at 19.8 times and Italian luxury leather goods maker Tod’s which trades at 20.7 times.

Larger rival Prada made a solid debut in Hong Kong on Friday, with shares rising by as much as 1.3 percent.


Ferragamo defied a tough European market for new listings, betting on growth prospects in booming Asian markets.

More than 20 IPOs have been pulled in Europe this year. Those who have managed to list have seen lackluster post-launch trading performance.

“One swallow does not make a summer,” a banker at the ceremony said.

However, in an encouraging sign for sentiment in the European IPO market, Poland completed a $1.9 billion listing of coking coal miner JSW late on Tuesday, pricing its float above the mid-point of its indicative range.

Spanish savings bank Bankia is also pushing ahead with its IPO which aims to raise around 3.65 billion euros.

Ferragamo’s offering received 3.6 times the amount of stock made available. But some fund managers had expressed concerns the valuation was a bit expensive for a group with lower profitability compared with the average of its European peers.

“Ferragamo has good foundations, but they have to dust off the brand a bit. If they do some good work, there’s a lot of potential,” said a Paris-based luxury analyst, who asked not to be identified.

A second fund manager said: “The stock was not placed at a great price and the multiples were fairly high in our opinion. But the company has an excellent story and the market’s buying that.”

Ferragamo raised 344 million euros ($487.1 million) in the listing, which values the group at 1.5 billion euros. By comparison, Prada raised $2.14 billion in its IPO.

“I feel very emotional, but I am happy. What I liked was the appreciation of our moral values, our family values,” Wanda Ferragamo, the 89-year-old widow of company founder Salvatore Ferragamo, said at the launch ceremony. ($1=.7062 Euro) (Additional reporting by Maria Pia Quaglia, Stephen Jewkes and Michel Rose; Editing by Erica Billingham, Louise Heavens and Jane Merriman)

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