Italian fashion house Prada Spa has proved to be a tough customer for underwriters of its up to USD 2.6 billion IPO, having capped the overall commission at 1.9% of the total offer which makes it among the lowest fees paid in recent Hong Kong IPOs.
Prada revealed in its prospectus released on Sunday that it will pay a base underwriting commission of 1.2% and up to 0.7% in incentive fees for the underwriting team.
Separately, a source told Reuters that the offer is five times subscribed.
Last year, American International Group Inc paid 2% commission for its massive USD 20.5 billion of AIA Group, which was managed by 11 underwriters.
Banca IMI, CLSA, a unit of Credit Agricole, Goldman Sachs and UniCredit are the joint global coordinators for Prada's offer, while ICBC and Mizuho Securities Asia Ltd are the joint lead managers.
The 1.9% underwriting fee compares with 3.25% paid by Samsonite International SA, the IPO of which last week raised USD 1.25 billion by selling shares at the bottom of a revised range.
Usually, the total underwriting commissions in Hong Kong initial public offerings (IPO) vary between 2% to 3.5%, depending on the size of the deal. However, some IPOs, such as the recently pulled Resourcehouse deal, offered as high as 4.3% in fees.
Historically, some large and government deals have offered lower fees. For instance, banks earned about USD 250 million in fees from AgBank's USD 22.1 billion IPO last year, which was the lowest underwriting payout by China's big four banks.
Still, for investment banks operating in Asia, equity capital market deals are big cash cows and make up for about two-thirds of all revenues.
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