• Graff Diamonds latest to withdraw listing in Hong Kong
• ‘We will be waiting until things have settled a little’
Formula One is expected to postpone its planned bn flotation in Singapore after jeweller Graff Diamonds became the fourth company to halt a planned listing in Asia in the past week.
The sport’s supremo, Bernie Ecclestone, believes that volatile markets and continuing problems in the eurozone make an initial public offering (IPO) unlikely until October at the earliest.
Formula One’s biggest shareholder, private equity firm CVC Capital Partners, had been expected to publish a prospectus on Tuesday, but Ecclestone said: “We haven’t got a date set yet, but with all the problems in the eurozone and the markets, we will be waiting until things have settled a little. Who would want to try and list now? I did see what Graff did, and it shows now isn’t the right time.”
He added: “This year, for sure, we are going to go through to market. I don’t think there’s a big rush, but we plan to get it done by the end of the year.
“With the way things are at the moment, people are reluctant to invest. Look at the markets. If people aren’t buying stock on companies that have been on the markets for 20 years, why will they come and invest in a new one now?”
The IPO had been expected in June, but Ecclestone’s intervention is likely to influence any decision made by the board, which is due to meet this weekend. “We’ll wait until October or November when the Formula One season is over,” he said, “because at the moment we just don’t have time to do an investor roadshow.”
The news came as London-based jeweller Graff postponed its IPO, which had been due to start on the Hong Kong exchange on Friday.
But with seemingly endless fears over the eurozone’s future and a slowdown in China’s economic growth, the business could only manage to take orders on half the shares it hoped to sell. Graff admitted: “Consistently declining stock markets proved to be a significant barrier to executing the transaction at this time.”
Shares in Graff were being offered at between HK and HK (£2.08 to £3.09), but this was seen as too high for a business that has just 20 customers accounting for nearly half of sales.
A slowdown in luxury spending in China left analysts and fund managers questioning Graff’s valuation, and Hong Kong’s Hang Seng index has plunged 12% since 7 May, when Graff executives and advisers started meeting with institutional investors.
Rival jewellers Tiffany, which is listed in Hong Kong, has fallen 14% in less than a month and last week cut its sales forecast, blaming slower demand from key markets such as China.
Three more major IPOs, worth a total of up to .37bn in Hong Kong and Singapore, have also been postponed and Facebook’s post-flotation woes continue: the social network’s performance on Nasdaq, which has seen shares trading below their opening value of , has led to some investors launching legal action against its advisers Morgan Stanley. On Thursday, Facebook was trading at around .
Ecclestone said he hoped to avoid a similar fate. “Facebook was obviously a problem,” he said, “but the price they put on it was ridiculous. How they ever got to that figure I’ll never know.”
Analysts have warned that if Formula One were to list now, it could struggle to get investors. It currently has debt levels close to bn and plans to float using a complicated structure of a share issue and loan notes that mature in 2060.
“Appetite for new listings is pretty weak generally because of the macro situation,” said Eugene Mak, an analyst at brokerage Core Pacific Yamaichi in Hong Kong.