China slowdown watch: Graff Diamonds pulls IPO
The FT reports Graff Diamonds has shelved its Hong Kong listing "after receiving orders for just half its $1bn initial public offering less than two days before its deadline," the latest indication that the slowdown in growth in China is hurting commodities businesses.
The announcement comes a week after China Nonferrous Mining Corp pulled the planned listing of its Zambian copper assets in Hong Kong.
Founder and controlling shareholder Laurence Graff, the undisputed king of uber-expensive diamonds, would have boosted his paper wealth massively with a successful IPO.
Graff was hoping to raise as much as $1 billion. It would have afforded the high end jewelry producer and retailer a market value of $3 billion to $4 billion.
Graff has about 20 stores worldwide, owns the majority of the cutter and polisher South African Diamond Corporation and also has a stake in Gem Diamonds, which operates the Letšeng mine in Lesotho.
Letseng produces some of the world's largest diamonds including the 603-carat Lesotho Promise which Graff made into a necklace of 26 stones that is valued at more than $60 million.
Graff is reliant on a small number of buyers – its top client last year bought a single item worth $100 million when total annual revenue was $756 million – and has to carry a massive inventory.
Besides jewelry Graff he owns a wine estate and hotel near Cape Town South Africa, a valuable modern and contemporary art collection and the obligatory super-yacht.
CNBC profiled Graff, who grew up in the working class neighbourhood of East London and dropped out of school at age 14 to become a jeweler's apprentice, in June last year:
Graff, now in his eighth decade, is circumspect about the future. His son François, 47, works for him in London. But two years ago, a potentially smooth family transition seemed at risk. Mr. Graff and his wife of 47 years, Anne Marie, were set to divorce after Mr. Graff fathered a child with a woman who had worked for him. The London tabloids screamed that it would be the largest divorce settlement in British history.
At the last minute, the couple reconciled. And Mr. Graff is open in recognizing his daughter.
Graff not only deals in rough stones. The accompanying image (courtesy of Christie’s auction house) is of the Wittelsbach diamond which was bought by Graff in 2008 for $24.3 million.
The 35.56-ct. Wittelsbach diamond was once owned by King Philip IV of Spain, who purchased it for his daughter, Margarita Teresa (in the background) for her engagement to Leopold I of Austria in 1664. It was mined in India and owned by the same private collector since 1964.
In a controversial move, Graff recut the diamond to remove imperfections, prompting criticism that he had essentially painted over a Rembrandt. The Wittelsbach Graff sold last year for an undisclosed amount.
The Graff family fortune is put at roughly $2.6 billion according to Forbes, which places Laurence Graff outside the top 40 of the 2012 mining billionaires list. Diamond billionaires are well represented on the list.
Number 21, Nicky Oppenheimer of De Beers is in charge of a family fortune estimated at $6.8 billion while Beny Steinmetz's diamond businesses supply him with a net worth of $5.9 billion. Controversial Angola-focused diamond miner Lev Leviev sits at #61 on the list .