Little love for LANV

Lanvin Group shares plunged 25% in their trading debut

97% of shares were redeemed by investors in the SPAC asking for their money back
Lanvin Group and Primavera Capital executives at the New York Stock Exchange debut. 
Lanvin Group and Primavera Capital executives at the New York Stock Exchange debut. 
Photo: Lanvin Group
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Shares of Chinese luxury firm Lanvin Group closed their first day of trading on the New York Stock Exchange at $7.63 a share, down 25% following volatile swings in the market.

The company debuted in a SPAC listing at $10 a share, valuing the company at $1.31 billion. The stock initially surged to $22.81 before dropping as low as $4.63 in afternoon trading. It regained some of that ground, but by market close was still far off the opening price.

The company, which owns a portfolio of fashion brands including namesake Lanvin, Sergio Rossi, Wolford, and St. John Knits raised $150 million, much lower than the $544 million that the group initially sought in March.

Some 97% of shares in the SPAC set up by Primavera Capital were redeemed, as investors asked for their capital back instead of staying on board for the merger with Lanvin (see our SPAC explainer here). Investors overall have turned away from SPAC listings, leading to high redemption rates. But the rate for Lanvin was notably higher than the 84% average redemption rate for de-SPAC transactions this year, according to data from SPAC Research.

“Investors are looking at this and don’t have a lot of confidence that Lanvin is going to be a successful company,” said Jay R. Ritter, a University of Florida professor who tracks IPO data. “[B]ecause there are so few shares [of the company] for public trading, swings in supply and demand can push the price around.”

Questions about Lanvin Group and the reopening of China’s economy

Lanvin Group has pitched itself as way to tap into the hunger for luxury in China, a market which is expected to account for half of the industry’s revenue by 2025. The company is projecting profitability in two years and says it can grow revenue to $1 billion over time.

In the first six months of the year, Lanvin Group recorded revenue of €202 million ($214 million), representing growth of 73% off of the prior year’s small base. It plans to open 200 new stores globally by 2025 and is hunting more labels to acquire.

But the company’s lack of fashion experience in a highly competitive sector, questions about parent Fosun International’s debt load, and a choppy road to China’s reopening after its zero-covid strategy all have cast doubt on the firm’s potential.

“We are confident the group will further develop its fast-growing global business to become a unique global luxury powerhouse,” said Max Chen, partner at Primavera Capital.

That may turn out to be the case. But the market is clearly skeptical.