Jeweler Cheng paves way for gold in China
By Farah Master
HONG KONG (Reuters) - For tycoon Cheng Yu-Tung, 86, listing his jewelry retailer Chow Tai Fook, the world's largest, on the Hong Kong Stock Exchange paves the way for his younger generation to strengthen its position in China's glittering market.
Chow Tai Fook Jewellery Group Ltd, built by Cheng from scratch into a household name in China, debuted on Thursday with a market value of about $19 billion - more than twice that of Tiffany & Co - after raising $2 billion from Hong Kong's third largest IPO this year.
The stock lost some of its sparkle, however, sliding as much as 9 percent - a victim of weak sentiment on global financial markets.
That market uncertainty has prompted several other companies to cancel Hong Kong IPOs, but Chow Tai Fook seized a tiny window of opportunity to launch its IPO and raise the money it badly needs for future expansion.
The decision to go ahead with the listing underscores Cheng's anxiety to cash in on China's booming jewelry market where demand from a burgeoning middle class is driving fiercer competition from Tiffany and Cartier as well as local rivals Chow Sang Sang and Luk Fook.
"We have no intention, at least for 10 years, to open any POS (points of sale) other than in China, Hong Kong and Macau," his son Henry Cheng, chairman of Chow Tai Fook, said earlier this month.
Chow Tai Fook - which means 'good luck' in Cantonese - will use the IPO proceeds to buy gold and diamonds and expand its jewelry store network.
While Chow Tai Fook is mainly run by Henry and his grandson Adrian, a Harvard graduate and ex-Goldman Sachs banker, analysts say Cheng Yu-Tung remains the lynchpin and, as honorary chairman of the 82 year-old firm, holds sway on the big decisions. Continued...