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Graff Diamonds starts US$1-bln IPO in HK

May. 21, 2012 (China Knowledge) - London-based jeweler Graff Diamonds Corp, known for its 24-carat Graff Pink diamond, today began launching its initial public offering in Hong Kong with fundraising of US$1 billion.

The Jeweler is selling shares at an indicative price range between HK$25 and HK$37 apiece, which would make the IPO Hong Kong's biggest following Haitong Securities Co<600837> that raised US$1.68 billion in April.

Based on the high end of the price range, the jeweler would sell 210 million shares, said a person familiar with the matter, adding that 311 million shares would be sold on the low end of the offering.

New shares issued in the IPO would account for 85% of the total shares. Price will be fixed on Jun. 1, and the company is set to start trading on the Hong Kong Stock Exchange on Jun. 8.

Rothschild is the financial adviser on the IPO, while Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings PLC<0005><HBC> and Morgan Stanley are bookrunners.

Graff Diamonds, which sells jewelry in 31 locations worldwide, plans to open an outlet each in Hong Kong, Shanghai, Macau and Hangzhou of Zhejiang Province in 2012.  

The Jeweler's sales totaled US$755.6 million last year, up 23% YoY from US$616.7 million, and its net profit increased by 15% YoY to US$120 million.

If priced at the highest end of indicative range that would put Graff at 24 times price earnings which beats other listed-jewelers like Harris Winston, Tiffany and Richemont, that are currently trading between 12 and 16 times PE.

According to Graff’s filing with HKSE, the jeweler will pay 20% of its 2012’s net earnings to shareholders.

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