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he company which has troubles with its IPO. Prada as has raised $US2.14 billion in its initial public offering in Hong Kong which was initially hope to raise $3billion, found few fans among retail investors (ch.1). They found out that it only covered half of the 10 per cent retail tranche, which leads to the 5 per cent of the IPO, which is set aside for Hong Kong public investors (chi.1).
Also, the Reuters issued news online which was named “Prada HK IPO pricing weighed by global risk aversion”. Increased volatility in global markets and the poor debut by luggage maker Samsonite (1910.HK) gave the pressure of Prada’s offering so that they called off the mid-point offering (ch.5). As the benchmark Hang Seng Index (Hong Kong) has declined these days, there is quite a volatile market these days. Luxury demand is very self explanatory and it makes a lot of sense for companies like Prada (ch.5).
Prada as one of the famous luxury brand has been successfully grown up these years because of its successful dress and handbags. But the volatile market weighted on their business. First of all, it is hard for Prada to predict their business in the reality because the demand is uncertain. Prada is not consumer goods or other necessities for life. Then, company issued the IPO in order to expand their business and they hope they can have positive responses from the market. Also, they need to let the people especially their investors know that they are doing well with their business, so that they can raise more capital.
The unpredictable make the market more volatility. Companies from different fields will have different about the situation they are going through. In my opinion, companies no matter how small or how large the company are, they need to be more cautious about issue the IPO or sell their stocks, especially because of the volatile of the market these days. In the other hand, risk management is important for a company because it will help the company to know that if it is worth to take that risk or not. Maybe the first several days of the IPO, they will gain and eventually they will disappoint their investors.
China carmaker BYD which is backed by Warren Buffett will raise $219 million in its IPO. The mews says: Warren Buffett-backed Chinese carmaker BYD Co Ltd (HKSE:1211.HK - News) will raise a less-than-expected 1.42 billion yuan ($219 million) in its initial public offering in Shenzhen, weighed down by weak investor sentiment and worries over its poor performance(ch.1). As we know, Buffett, as one of the best investor maintained and reiterated his strong support for BYD. Also, BYD revealed that they will use the proceeds from the sale to projects, researches and expand their business. BYD tried to return to the mainland stock market before and eventually get the approval China Securities Regulatory Commission in May.
As we can see here, from those examples, general companies try to take advantage of the stock to raise their capital in order to make expand their business. But the thing is that before they actually offer their IPO, they would like to balance their risks with their income. Compared with debt, the company doesn’t have to pay back the funds. In contrast, they will lose part of their ownership. Small companies would like to raise money by offering IPO because this way is fast and reliable because as soon as they go public, people can buy their shares and they can raise their capital. But also,