Prada Ipo or Not

1503 words 7 pages
Problem: Prada requires a significant amount of capital both to re-finance debt that is maturing in the next six to twelve months and to finance its intended growth into the Asian (especially Chinese) markets

Alternative Solutions:
#1) IPO: (Initial Public Offering) Cons: High tax and pricing "We received little demand from our (retail) clients for the (Prada) shares. It might be the 12.5 percent tax that scared them away and the pricing itself was expensive when it compared with its peers," said Alfred Chan, chief dealer at Cheer Pearl Investment. "Unlike institutions, our retail clients hold the shares for a much shorter term," he added.

"Consumers are willing to pay a very high premium chasing after brands, but
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China is too important to ignore what its consumers are asking for.

Rather, it has used its Asian listing to build a stronger position in emerging Asia, and the capital raised has also been a springboard to building a more global brand. As a result, Prada is better placed to spread risk today than it was before the listing

Cons: #2 Hong kong IPO

stock market turmoil in China and signs of growing strains in the world's second-largest economy.-2015

Alternative solutions:
#2) pre-ipo convertible bonds to pay off debt???

1.Macro and Industry Analysis3
1.1Financing Environment3
1.1.1International Monetary Market3
1.1.2 International Bond Market 7
1.1.3 International Stock Market9
1.1.4 International Private Equity Market 10
1.2 Industry Analysis 10
1.2.1 Industry Life Cycle Analysis 11
1.2.2 Five Forces Analysis 13
2.Financial Analysis and Forecasting20
2.1 Financial Analysis 20
2.1.1 Profitability Analysis 20
2.1.2 Debt Solvency Analysis 24
2.1.3 A Close Look at Prada’s Cash Flow 27
2.2 Forecasting and Capital Needed 33
2.2.1 Forecasting Pro Forma 33
2.2.2 Capital Needed 35
3.Financing Alternatives Selection 38

⇑First write these as your source for alternative solutions

3.1 IPO Alternative 39
3.1.1Current Environment 39
3.1.2 Pros and Cons 44
3.1.3 Simulations 46
3.1.4 Impact on Future Growth 53
3.2Strategic Partner Alternative


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