Graff Plans Asian Expansion

The Graff Diamonds store on New Bond Street, London.

Graff Diamonds Ltd. is planning to file an initial public offering, most likely in Hong Kong, in order to fund its expansion into Asia, according to several reports.

The London-based company, owned by Laurence Graff, is using the IPO to raise $1 billion and increase the value of the company to $5 billion, the Financial Times (subscription required) and other publications report. Graff has reportedly hired financial consultant, Rothschild Group, to advise him on the IPO, which is expected sometime next year.

The company, known for its luxury diamond jewelry, already has a network of more than 30 jewelry stores throughout the world. Graff would use the money raised in the IPO to fund a greater expansion into Asia, by far the largest growth market for luxury diamond jewelry, according to reports. In addition, the company hopes to use the funding to expand production of high-end pieces and increase its inventory of rare gemstones.

Hong Kong isn’t the only listing location being considered, but Asia is the company’s focus, according to reports.

Pandora Raises 2 Billion in IPO

Danish jeweler Pandora charmed investors with an IPO worth up to $2.1 billion in one of Europe's largest market listings this year, Reuters and other media outlets report.

Pandora shares, priced at 210 Danish crowns in the initial public offering, closed up at 263, giving investors a 25 percent gain and valuing the company at about $6.1 billion, Reuters reports. More than 4 billion crowns ($739 million) of Pandora stock changed hands on the Copenhagen stock exchange—nearly double the normal daily turnover for the whole bourse. The company priced its IPO at the high end of a preliminary range of 175-225 crowns.

Analysts reportedly said Pandora's high growth and strong margins made the share offer attractive to investors hungry for new stock after a period of scant IPO activity, despite its short track record and heavy reliance on a single product.

Pandora's mass-market jewelry, sold mainly in the United States and Europe, is priced in an approximate $50-$1,500 range. The company makes customizable silver and gold charm bracelets, rings, necklaces and earrings at its three factories in Thailand, where it employs 3,300 people out of its total workforce of 4,500, and sells them in 45 countries.

Its big seller is charm bracelets, made of silver or gold, with the charms of stones such as amethyst, onyx or moonstone. It made 86 percent of first-half sales from bracelets and charms.

Pandora, founded in 1982 by husband-and-wife team Per and Winnie Enevoldsen as a Copenhagen shop, has grown rapidly over the past decade, with revenue of about $640.4 million in 2009. Axcel, the Danish private equity group, bought a 60 percent stake in the company from the Enevoldsen family two years ago.

Pandora made 41 percent of its first-half sales in the United States, the company reportedly said.

Danish Authorities Investigate Pandora’s IPO

One of the largest IPOs in 2010 is now being investigated by the Danish government.

The Danish Financial Supervisory Authority, the country’s market regulator, said Tuesday they will ask police to investigate Nordea Bank Denmark, a unit of Sweden's Nordea, for failing to report its financial interest in jewelry maker Pandora in an investment analysis prior to the  company’s float in October, Reuters reports.

The FSA said at the time of the analysis, Nordea’s indirect ownership in Pandora was 3.9 percent, the FSA reportedly said. Before the company was listed on the Copenhagen stock exchange, that stake was worth around 1.23 billion Danish crowns ($238.5 million).

“It is the FSA's evaluation that the general disclaimer does not sufficiently live up to the notice requirements regarding the announcement of significant financial interests,” the FSA reportedly said in a statement.

Nordea has reportedly admitted fault and said it will “adjust” its notification policy.

Nordea was one of the arrangers of Pandora’s IPO on the Copenhagen Stock Exchange in October, Reuters reports. That float raised $2.1 billion for the company, known for its popular charm jewelry. It was the fourth largest IPO in Europe in 2010.

The company, which designs its jewelry at its Copenhagen’s headquarters and makes them in cost-friendly Thailand, was flying high following the IPO with earnings reports touting spectacular growth until August 2, when the company released its second quarter report two weeks early with less than expected growth as well as declines in major markets. It drastically downgraded its sales and profits targets for 2011 from a revenue growth of no less than 30 percent to 0; and noted that sales fell 30 percent in July.

The profit warning caused the company’s stock to drop 70 percent in less than a day. Since its IPO, the company has reportedly lost 80 percent of its value.

Graff’s IPO May Reach $1 Billion

The Graff Diamonds store on New Bond Street, London.

Arguably the most exclusive jeweler in the world, Graff Diamonds, is shopping its IPO as it prepares for a June 8 listing on the Hong Kong Stock Exchange. According to reports, the diamond jeweler to the 0.1 percent of the 1 percent is expecting to raise $1 billion, which would value the retailer, and diamond and jewelry producer at $3 to $4 billion.

The London-based firm, known for its luxury diamond jewelry and for its owner’s penchant to buy some of the world’s most expensive gemstones, is expecting to raise $25 - $37 Hong Kong dollars ($3.22 - $4.76) per share, according to reports.

Laurence Graff, Graff Diamonds founder and chairman, and Francois Graff, CEO, met potential investors Monday, according to reports.

The money raised will primarily be used for expansion of the Asian retail network, development of Graff as an "iconic brand" (isn’t it already an iconic brand?) and developing the watch business, according to reports. The company currently has a network of more 30 stores, including five in China.

Graff Diamonds said it made $623.5 million in retail sales last year compared with $454.3 million the year before. However, a total of 20 customers accounted for 40 percent of its sales for the past three years. The company is also one of the few that have a mine-to-market operation that includes sourcing its own diamonds and gemstones and making its own jewelry.

The success of the IPO will not only be based on investors belief in the strength of the company, but their assessment of the increased growth among the world’s wealthy, particularly in China.

Beny Steinmetz Group to Float Sierra Leone Diamond Mine

Koidu diamond mine in Sierra Leone

The Beny Steinmetz Group, will soon issue an initial public offering for its Koidu diamond mine in Sierra Leone, according to the Financial Times and other reports.

The privately held natural resources company will issue its float on the Hong Kong Stock Exchange in later half of 2012 through a spinoff company called Octea, which serves as the holding company for the mine, according to the report. It will attempt to raise $400 million to $600 million and achieve a valuation of $2 billion to $3 billion.

BSG reportedly says the mine is expected to produce 500,000 carats this year and buyers of the its diamonds include Tiffany & Co.

It’s the latest attempt to take advantage of rising diamond demand in Asia along with dwindling supply. The Oppenheimer family, which owned a major stake in De Beers, sold out to its partner Anglo America for $5.1 billion. Russian diamond mining giant Alrosa is also reportedly attempting a listing. Other investment vehicles are being developed by luxury retailer Harry Winston, which has a 40-percent stake in the Diavik Diamond Mine in the Northwest Territories of Canada, diamond dealer Martin Rapaport, who is known for his Rap Diamond Price List, and Clive Cowdery, the founder of the U.K. insurance company, Resolution.

This float also highlights the dramatic changes of the diamond mining industry in the west African country. In the 1990s, the illicit use diamond mines were used by rebel groups to fund the attempted overthrow of the government and commit atrocities on its citizens, including mass murder, mutilations and virtual slavery in the diamond mines. It eventually led to ban of diamonds from the country.

The fact that Tiffany, which prides itself on being a good corporate citizen, is now sourcing diamonds from the mine showcases the international effort to end the abuse of the illicit diamond trade and its ability to bring stability to the country.