Hong Kong - AFP
Italian luxury goods maker Prada has raised a lower-than-expected $2.14 billion in its Hong Kong share sale as turbulent global markets and a tax hurdle dampened investors\' enthusiasm. The family-owned brand sold 423.2 million shares at HK$39.50 ($5) apiece after earlier saying it could raise as much as $2.6 billion before any option to issue extra shares, which could have pushed the deal to $3 billion in all, Dow Jones Newswires reported Friday, citing an unnamed source. The Milan-based firm, which is hoping to tap surging demand for luxury goods in Asia, had previously said it might price the shares as high as HK$48 each. The lowered price indicated weaker-than-expected demand. Prada will make its trading debut in the Asian financial hub on June 24. At a time of unease in markets around the world some firms have decided to delay or cancel their listings in Hong Kong, the world\'s number-one IPO market for the past two years. Earlier this month, Australian miner Resourcehouse shelved an IPO originally slated to raise as much as $3.6 billion, citing weak market conditions. And luggage maker Samsonite had a poor trading debut in Hong Kong Thursday after its shares closed nearly eight percent below their IPO price. Although only about 10 percent of Prada\'s shares were set aside for retail investors, some of Hong Kong\'s savvy stock buyers may have also been turned off by Italian tax rules that could shrink their profits. Hong Kong and Rome do not have a tax treaty in place so shareholders in the city would be on the hook to pay a 12.5 percent Italian capital gains tax, and lose 27 percent of their dividend income in a separate withholding tax. \"So if, for example, their dividend income was $100, only $73 would be remitted to them, because it is regarded as Italian-sourced income,\" Ayesha Lau, partner in charge of tax at KPMG in Hong Kong, has told AFP. \"But how are (Italian tax authorities) going to enforce it? I really don\'t know the answer to that.\" Lau added that Hong Kong investors also faced a cumbersome tax filing process with some documentation only available in Italian. The fashion house, which includes the Prada, Miu Miu, Church\'s and Car Shoe brands and is 95 percent owned by the Prada family and executives, is the latest high-end fashion brand to tap the huge Chinese market, the world\'s fastest-growing market for luxury goods. China is forecast to be the world\'s top buyer of products such as cosmetics, handbags, watches, shoes and clothes by 2015, according to consultancy PriceWaterhouseCoopers.