Prada Case Analysis

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“FINANCE” Course “PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN” case analysis Brief summary of the case with the emphasis on managerial problems that Prada faces. Prada currently 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. Since financial markets are aware of Prada’s pressing need to raise capital, it is important for the board of directors to develop a credible strategy for raising the necessary capital of at least €1 billion. Although the press has been suggesting that Prada will do an initial public offering, the company has tried this several times in the…show more content…
Equity IPO in HK 1.higher valuation than listed in Europe 2. aim to the Asia market 1.HK market has lower liquidity 3.potential tax problem HKDR 1. listed in Milan but also can be bought and sold by investors in HK. 2.help future negotiation in China 3. may have lower valuation than IPO in HK 4. higher cost than IPO Strategic partnership 1.current price for PE transaction is attractive 2.higher premium 1. higher cost than other alternatives 3. may cause partially loss of control of the corporation Debt Traditional corporate bond 1. easily priced 2 2. further potential financial problem 3. higher leverage ratio 4. How would you recommend the board of directors proceed? One of the best solutions for Prada to solve this problem is to raise capital in the stock market, which we could refer as IPO. Given the current market conditions, listing in Hong Kong might appears to be the best choice after
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