Chow Tai Fook, a decades-old Chinese jewelry retailer with 1,400 stores, has hired seven banks to underwrite its forthcoming IPO in Hong Kong,it was reported late Monday. The main underwriters are to be Deutsche Bank, Goldman Sachs Group, HSBC Holdings and JPMorgan Chase. Chow Tai Fook has also engaged Citigroup, Credit Suisse Group and UBS to underwrite the offer.
The mainland chain, founded by Chow Chi Yuen in 1929 in Guangzhou and now controlled by his billionaire son-in-law Cheng Yu-Tung, plans massive expansion, mostly on the mainland, and currently competes head-to-head with other domestic jewelers and foreign firms such as Tiffany.
Reuters reported that the exploding luxury market in China, the world's second-largest economy, has experienced double-digit growth over the past several years. Customers are eager to buy not only jewelry, but such Western luxury staples as goods from Hermés International and LVMH Hennessy Louis Vuitton. Alan Chan, Chow Tai Fook's global branding director, was quoted as saying at the Reuters Global Luxury Summit on Monday in Hong Kong, "We aim to open 200 stores every year, with 90% of them in China."
A source who was not authorized to talk about the IPO was quoted as saying that the company could raise $3 billion from the move, scheduled for the first quarter of 2012. Consulting firm McKinsey & Co. has said that China could account for 20% of the global luxury market by 2015. The company projected spending to almost triple to $27 billion, from 2009's total of approximately $10 billion.