Stitch in time?

Prada: Even a disastrous week for stocks couldn't leave Prada looking ruffled. The Italian fashion group's Hong Kong initial public offering priced at the bottom of its guided range on June 17. Yet the company still strutted off with a generous $13 billion valuation, after raising $2.1 billion. To get such a large IPO away at all, given the more than 8 percent fall in Hong Kong's market this month, is a triumph. Hopefully other issuers will see this for what it is: a lucky break.

At the final price, Prada will start trading at just over 22 times its expected earnings for 2011. That may be almost 20 percent lower than it wanted, but it's still pretty lavish. Luxury conglomerate Moet-Hennessy Louis Vuitton trades at a lowly 19 times. Bulgari and Hermes may enjoy ratings almost twice as high as Prada's, but both are long-term bid targets with more cachet. There is no sign that Prada has been priced at a reasonable discount to fair value.

Even at the bottom end of its punchy price range, the issue was a close call. Retail investors largely thumbed their noses at Prada for fear of being forced to pay Italian capital gains tax, leaving a portion of the retail offering uncovered. The institutional offering was covered a few times over at the issue price, but that is no guarantee of a buoyant start when formal trading starts on June 24. Hong Kong investors have a habit of ordering more shares than they actually want - and sometimes refusing to take those that they get.

Miuccia Prada and Patrizio Bertelli, the founders, should be thrilled that their fifth attempt at going public has come good. They remain invested, so the price wasn't a critical issue for them, notwithstanding the modest dilution from the small element of new money in the offering. Sadly their win is Hong Kong's loss. While the market may be due for a hiatus, the habit of new stock issuers aiming too high, and eschewing the sensible IPO discount, will live on.