The family behind Graff Diamonds will need to rethink its succession plans after the upmarket British jeweller had to scrap an initial public offering because of “consistently declining stock markets”.
The $1 billion (€805 million) IPO, which had been expected to be the largest in Hong Kong this year, was part of the company’s succession plans, a person close to the situation had told CampdenFB earlier this week.
But just two days before its deadline, the business, controlled by the eponymous family, had orders for just half of its public offering.
In a statement, the company said: “Graff Diamonds Corporation confirms that owing to adverse market conditions it has decided to postpone its planned IPO and listing on the Hong Kong Stock Exchange.”
Two other companies have already pulled a Hong Kong IPO this week, amid continued weakness in global equity markets.
On 29 May, the source told CampdenFB that the company had chosen Hong Kong in a bid to raise its profile in Asia and because of the huge growth it was experiencing in the region.
Revenues at its retail division, led by family member Francois Graff, jumped by 39% between 2009 and 2011 to $755.6 million – with the Asian market growing by 136.6% during the period.
At a press conference last weekend, Francois said the family business was planning to increase the number of stores in Asia in the next few years.
However, the company, which targets ultra-high net worth buyers, heavily relies on a core set of customers – in 2011, its 20 top customers accounted for 44% of its revenue.
The source also said the offering was part of the company’s plans for current chief executive Francois to one day take over from his father, company founder and executive chairman Laurence Graff. The IPO would cement succession plans, giving greater recognition to Francois’s work, the insider said.
Although there was speculation the IPO was Laurence’s way of getting out of the business, the source said the 73-year-old, who founded the jewellers in 1960, would remain involved in Graff – particularly in the procurement and polishing division, and in making commercial decisions.
Under the plans, more than $350 million of the money raised was expected to be paid directly to Laurence as part of a reorganisation of businesses, properties and other assets.
The company was previously listed in 1973, before Laurence bought out shareholders four years later.
Graff had planned to start trading on 7 June.