{"id":47956,"date":"2019-07-16T11:46:37","date_gmt":"2019-07-16T10:46:37","guid":{"rendered":"https:\/\/www.watchpro.com\/?p=47956"},"modified":"2019-12-12T17:52:26","modified_gmt":"2019-12-12T17:52:26","slug":"in-depth-inside-watches-of-switzerlands-billion-dollar-listing","status":"publish","type":"post","link":"https:\/\/www.watchpro.com\/in-depth-inside-watches-of-switzerlands-billion-dollar-listing\/","title":{"rendered":"IN DEPTH: Inside Watches of Switzerland\u2019s billion dollar listing"},"content":{"rendered":"
It was far from a foregone conclusion that Watches of Switzerland\u2019s IPO in the first week of June would get away smoothly. The retail landscape is cratered, UK politics is broken and the group\u2019s massive dependence on Rolex was a risk factor for investors. But on the morning of the listing, WatchPro\u2019s Alex Douglas caught up with group CEO, Brian Duffy, who was delighted as its stock price rose by 17% within hours.<\/strong><\/p>\n The day the Watches of Switzerland Group went public on the London Stock Exchange was, as expected, preceded by a lot of anticipation from inside and outside of the industry. A business titan from the luxury segment attracts interest from not only those with a vested interest from within the business of watches and jewellery but also from the budding watch enthusiast and consumer.<\/p>\n After weeks of speculation and discussion, the group made its debut on May 30 with shares listed at an initial price of 270p, the top end of anticipated 250-277p range. The offer garnered instant success with shares climbing over 17% within hours reaching a peak of 315p.<\/p>\n Today (July 16), the stock \u2014 ticker symbol WSOG \u2014 is trading at 290p, valuing the group at \u00a3694 million ($863m).<\/p>\n The success of the listing meant that an initial offer of 30% of the company\u2019s shares was increased to 40%, almost all of which was vacuumed up by institutional investors. Trading has been thin, but positivity surrounding the offering has continued and at nearly a month after its debut, shares are trading at 305p per share.<\/p>\n Speaking exclusively to WatchPro<\/em> on the day of the listing, Brian Duffy, CEO of Watches of Switzerland Group, said the IPO had gone even better than he expected. \u201cIt\u2019s been great. We more or less went to around 14 or 15% up and we\u2019ve been as high as 17% up. So clearly it has been good, it is ahead of anything I was expecting for sure.<\/p>\n \u201cWe had a great reaction, we were way over subscribed and we had the feedback from the beginning that our pricing was \u2018very reasonable\u2019 which was the term most frequently used so it was out there that we were not trying to push anything and we finished it, but the most difficult part of it all was last night trying to allocate to investors a proportion of what they had asked for and in any case all of it. So yes, I did expect a positive demand today but I did not expect it to be double digits.\u201d<\/p>\n Despite recent IPOs across other markets receiving somewhat of a negative reaction in recent months, Mr Duffy always felt the luxury watch market, and the place Watches of Switzerland has in it, would hold its own.<\/p>\n \u201cI was always confident and knew that we were one of a kind out there and know that luxury watches are unique and think that our positioning in the market makes us unique as well so I was confident no matter what was happening. \u201cHaving said that, you would have ideally hoped for better market conditions as there\u2019s been quite a lot of volatility over the past couple of weeks, further uncertainty over Brexit and whatever but is there ever a perfect time? I don\u2019t think so and clearly it hasn\u2019t significantly impacted us,\u201d commented Mr Duffy.<\/p>\n Setting the right price for a public offering is crucial. Too low and the company\u2019s owner, in this case private equity firm Apollo Global Management, would give up too much of the potential value of the company to the new investors. Set it too high and demand could be snuffed out.<\/p>\n Mr Duffy feels his team struck the right balance, and the performance of the stock since its IPO suggests he is correct. \u201cIt is more or less 14x our PE so I do think it is a fair valuation. You could argue that it has got an element of discount which I think is right. As a new entrant to the market, people have to get to know us so we were always very comfortable with that. I think it was a narrow range that we started with 250 to 277. We then narrowed that after a couple of steps to I think 263 to 275 and then we settled on 270.\u201d<\/p>\n <\/p>\n