Graff Diamonds pulls float due to market chaos
GRAFF Diamonds last night decided to postpone its flotation after late-stage talks with potential US investors failed to fill the order book.
As City A.M. reported yesterday, the advisers to the float had been struggling to attract sufficient orders for the $1bn share issue to go ahead, with banks reporting the order book just 50 per cent covered at the bottom end of the price range.
In a statement issued last night, Graff Diamonds said its decision to postpone the Hong Kong listing was due to “adverse market conditions”.
The company said it “enjoyed high quality engagement on its business and strategy from a very broad range of prospective investors, however consistently declining stock markets proved to be a significant barrier to executing the transaction at this time.”
Graff Diamonds added that it will continue to grow its business irrespective of the unsuccessful IPO. Sources close to the situation said that store openings in Asia are to go ahead as planned.
Graff’s decision to float in Hong Kong, which is becoming a favourite market for luxury goods companies, was seen as a blow to the London capital markets.
The failed flotation will disappoint its bookrunners, which include Goldman Sachs, Morgan Stanley, Credit Suisse, Deutsche Bank and HSBC. Graff is being advised on the deal by Rothschild.
While the diamond firm blamed volatile markets for the suspension of its IPO, news that just 20 clients account for 44 per cent of the firm’s revenues would not have helped the cause either.
The postponed float will put a cork in plans to allocate a large chunk of the IPO’s proceeds towards buying a substantial diamond inventory from Graff founder Laurence Graff.