Prada IPO
To: Prada Board of Directors
From: Grupo Capo Milano
Subject: Options to Raise Capital Business Proposal Following a series of expansions and acquisitions in the early 2000s Prada has found itself with a large amount of debt maturing over the next year. Since Prada is challenged with raising €1 billion to cover loans maturing in the coming year, the analysts at GCP have researched several options for the board to consider. These alternatives include issuing sort term bonds, forming a joint venture, and completing an IPO. Considering the pros and cons of each option while heeding the concerns and preferences of the Prada family, GCP recommends the board pursue an IPO. Outlined in this memo the board will read the rationale behind pursuing the IPO as well as information on alternative options.
Luxury Goods – Market Outlook To become an attractive IPO option for investors Prada needs to demonstrate it has the correct market position to be profitable in the coming years. Over the past 10 years the luxury goods market has seen steady growth despite significant negative world events and has expanded to a €172 billion industry. The European market and Americas make up a market share of 37 and 31 per cent respectively as well as growth rates of three and one per cent . While these markets represent the cash cows for Prada, the Asian Pacific market is where the company seeks to position itself moving forward. Though this market represents 16 per cent of the global market, it has seen an average growth rate of 27 per cent over the past three years. Prada has already begun to capitalize on the growth in this region as nearly one third of sales in 2011 were from this region. With the world economy recovering from the great recession and the Asian (specifically Chinese) economies have thrived and are giving birth to a large middle class with increased demand for luxury goods. With five year projections indicating continued double digit growth
From: Grupo Capo Milano
Subject: Options to Raise Capital Business Proposal Following a series of expansions and acquisitions in the early 2000s Prada has found itself with a large amount of debt maturing over the next year. Since Prada is challenged with raising €1 billion to cover loans maturing in the coming year, the analysts at GCP have researched several options for the board to consider. These alternatives include issuing sort term bonds, forming a joint venture, and completing an IPO. Considering the pros and cons of each option while heeding the concerns and preferences of the Prada family, GCP recommends the board pursue an IPO. Outlined in this memo the board will read the rationale behind pursuing the IPO as well as information on alternative options.
Luxury Goods – Market Outlook To become an attractive IPO option for investors Prada needs to demonstrate it has the correct market position to be profitable in the coming years. Over the past 10 years the luxury goods market has seen steady growth despite significant negative world events and has expanded to a €172 billion industry. The European market and Americas make up a market share of 37 and 31 per cent respectively as well as growth rates of three and one per cent . While these markets represent the cash cows for Prada, the Asian Pacific market is where the company seeks to position itself moving forward. Though this market represents 16 per cent of the global market, it has seen an average growth rate of 27 per cent over the past three years. Prada has already begun to capitalize on the growth in this region as nearly one third of sales in 2011 were from this region. With the world economy recovering from the great recession and the Asian (specifically Chinese) economies have thrived and are giving birth to a large middle class with increased demand for luxury goods. With five year projections indicating continued double digit growth