Prada - Recommendation to Ipo in Hk
Autor: Joycehsq • November 10, 2016 • Essay • 429 Words (2 Pages) • 619 Views
MEMORANDUM
TO: Mr. Guido Santini
FROM:
DATE: September 11, 2016
SUBJECT: Recommendation to IPO in HK
The purpose of this memorandum is to analyze the alternatives for raising capital and to recommend the best option for Prada. Considering the need to reduce 1 billion euros debts within the next year and fund expansion in Asia, I recommend Prada to list in HK.
Initial Public Offering is the Best Option
Prada can raise a large amount of money it needs via IPO without paying interests and principals later. To be specific, compared with IPO in Milan, IPO in HK enjoys more benefits. First of all, Prada can have a higher valuation in HK than in Europe because demand in HK is strong in spite of the uncertain global financial markets. Moreover, IPO in HK makes Prada closer to its fastest growing market China, which may help its future sales negotiations with China. Last but not least, HK has a lower tax regime. For instance, it has no capital gains tax. The following table compares the pros and cons of each alternative:
Alternatives | Pros | Cons |
IPO in HK | Higher valuation in HK Future sales negotiations with China Low tax regime in HK | Uncertainty in equity market Higher fees in HK results in liquidity problem |
Strategic Partner | Financial partners may not involve in business operations Promising current pricing for PE transactions | May lose a large percent of ownership stake PE may take part in business operations |
Debt | Raise money in European market or U.S. dollar market or HK market | Need pay back debts and interest |
As we can see, IPO in HK offers more than just raising capital. Its pros outweigh its cons.
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