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Moncler's shares soar 40 percent in Milan market debut

Models present creations by Italian designer Giambattista Valli as part of his Spring/Summer 2014 women's ready-to-wear collection for fashi
Models present creations by Italian designer Giambattista Valli as part of his Spring/Summer 2014 women's ready-to-wear collection for fashi

By Isla Binnie

MILAN (Reuters) - Moncler shares jumped more than 40 percent on their first day of trading in Milan as investors scrambled to put their money into the maker of luxury down jackets, attracted by its strong revenue growth prospects.

Moncler, which started life as a ski jacket maker in the French Alps in 1952, wooed investors with the worldwide reach of its brand and consumer appetite for chic outdoor gear.

"There was incredible demand," said Bernstein luxury goods analyst Mario Ortelli. "In the short term, I expect the company will have stronger growth than the market."

Moncler shares were changing hands at around 14.5 euros by 1126 GMT on Monday, compared to a listing price of 10.2 euros. Milan's bourse was broadly flat on the day.

The listing of around 31 percent valued Moncler at 2.55 billion euros ($3.5 billion), but the share spike indicates it is now worth around 3.6 billion euros.

Moncler's main shareholders raised 681 million euros through the share sale, Italy's biggest initial public offering (IPO) since 2010 and the biggest by an Italian company since Prada's Hong Kong listing in 2011.

A source familiar with the matter said new investors in Moncler had included Italian luxury leather group Salvatore Ferragamo and LVMH head Bernard Arnault.

Sovereign wealth funds from Qatar, Singapore, Abu Dhabi and China also bought shares, the source said.

The company said it received subscriptions worth 27 times the number of shares on offer, including a "greenshoe" over-allotment option.

If this option is exercised, allowing extra shares to be sold to meet the strong demand, the size of the sale could increase by 15 percent to around 784 million euros.

Around 80 percent of investors who placed orders for shares in the offering, which closed on December 11, received nothing, two people familiar with matter said.

Moncler's first-day gain far exceeded that of Salvatore Ferragamo after its 2011 listing. Ferragamo's shares settled around 6 percent above their IPO price after their debut.

GROWTH PROSPECTS

Moncler's revenues are expected to rise 16 percent this year and a further 18 percent next year to 670.9 million euros, according to a document used to market the listing to investors by joint bookrunner Banca IMI.

Company president Remo Ruffini, who bought the brand in 2003 and is the biggest shareholder after the listing, said at a ceremony to mark the start of trading that shares were allocated "to reflect Moncler's geographical reach: a third in Europe, a third in the Americas and a third in Asia".

French investment firm Eurazeo , private equity group Carlyle and Brands Partners sold part of their holdings, but will all keep a stake in Moncler.

The IPO price gave the maker of $1,200 goose down jackets a forward price to earnings ratio of about 20.5 times, putting it at a premium to bigger luxury peers such as Richemont and LVMH , which are trading on about 16.5 times, but at a discount to Prada <1913.HK>, which is on about 23 times.

Ruffini has said the company plans to expand its product offering beyond the down jackets for which it is best known, a plan which shareholders hope will guarantee sales growth.

"The real challenge for the company in the long run is to decrease dependency on the main product line," said Ortelli, adding it should adapt its shops to accommodate new products.

"When you are reliant on one product category you run the risk of fading because people get bored."

The offering was run by Bank of America Merrill Lynch , Goldman Sachs , and Mediobanca .

($1 = 0.7283 euros)

(Additional reporting by Elisa Anzolin in Milan and Kylie MacLellan in London; editing by Astrid Wendlandt and Tom Pfeiffer)

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