IN DEPTH: Inside Watches of Switzerland’s billion dollar listing


It was far from a foregone conclusion that Watches of Switzerland’s IPO in the first week of June would get away smoothly. The retail landscape is cratered, UK politics is broken and the group’s massive dependence on Rolex was a risk factor for investors. But on the morning of the listing, WatchPro’s Alex Douglas caught up with group CEO, Brian Duffy, who was delighted as its stock price rose by 17% within hours.

The day the Watches of Switzerland Group went public on the London Stock Exchange was, as expected, preceded by a lot of anticipation from inside and outside of the industry. A business titan from the luxury segment attracts interest from not only those with a vested interest from within the business of watches and jewellery but also from the budding watch enthusiast and consumer.

After weeks of speculation and discussion, the group made its debut on May 30 with shares listed at an initial price of 270p, the top end of anticipated 250-277p range. The offer garnered instant success with shares climbing over 17% within hours reaching a peak of 315p.


Today (July 16), the stock — ticker symbol WSOG — is trading at 290p, valuing the group at £694 million ($863m).

The success of the listing meant that an initial offer of 30% of the company’s shares was increased to 40%, almost all of which was vacuumed up by institutional investors. Trading has been thin, but positivity surrounding the offering has continued and at nearly a month after its debut, shares are trading at 305p per share.

Speaking exclusively to WatchPro on the day of the listing, Brian Duffy, CEO of Watches of Switzerland Group, said the IPO had gone even better than he expected. “It’s been great. We more or less went to around 14 or 15% up and we’ve been as high as 17% up. So clearly it has been good, it is ahead of anything I was expecting for sure.

“We had a great reaction, we were way over subscribed and we had the feedback from the beginning that our pricing was ‘very reasonable’ which was the term most frequently used so it was out there that we were not trying to push anything and we finished it, but the most difficult part of it all was last night trying to allocate to investors a proportion of what they had asked for and in any case all of it. So yes, I did expect a positive demand today but I did not expect it to be double digits.”

Despite recent IPOs across other markets receiving somewhat of a negative reaction in recent months, Mr Duffy always felt the luxury watch market, and the place Watches of Switzerland has in it, would hold its own.

“I was always confident and knew that we were one of a kind out there and know that luxury watches are unique and think that our positioning in the market makes us unique as well so I was confident no matter what was happening. “Having said that, you would have ideally hoped for better market conditions as there’s been quite a lot of volatility over the past couple of weeks, further uncertainty over Brexit and whatever but is there ever a perfect time? I don’t think so and clearly it hasn’t significantly impacted us,” commented Mr Duffy.

Setting the right price for a public offering is crucial. Too low and the company’s owner, in this case private equity firm Apollo Global Management, would give up too much of the potential value of the company to the new investors. Set it too high and demand could be snuffed out.

Mr Duffy feels his team struck the right balance, and the performance of the stock since its IPO suggests he is correct. “It is more or less 14x our PE so I do think it is a fair valuation. You could argue that it has got an element of discount which I think is right. As a new entrant to the market, people have to get to know us so we were always very comfortable with that. I think it was a narrow range that we started with 250 to 277. We then narrowed that after a couple of steps to I think 263 to 275 and then we settled on 270.”



Prior to the listing, it was expected that around £220m in net proceeds would be raised and a large majority of that would be used to pay down debts. Mr Duffy said the amount raised would be north of that figure and also confirmed around £155m would be used to help with debts, something he thinks is necessary in the new public space.

He explained: “I think it has actually turned out to be a bit more than £220m, I think Apollo said from the beginning that they would be prepared to go at something around 10% of their shares so it has gone at a little bit more than that. Apollo selling 15% of their stake approximately results in us having a 40% free float so the public out there owns 40% of the business now.”

Following the stellar offering, it was not only the company and investors that were benefiting from the public move, but company CEO, Brian Duffy himself.

Around three weeks on from the big day, it was confirmed to WatchPro that Mr Duffy sold 1,868,694 shares of the company’s stock as part of the initial public offering on the London Stock Exchange.

A disclosure to the exchange, which requires notification of transactions by Directors, Persons Discharging Managerial Responsibilities (PDMRs) and persons closely associated with them, says that Mr Duffy’s stock was sold at an average price of £2.70 ($3.53), for a total transaction of £5,045,473.

nders Romberg, the UK-based Watches of Switzerland Group chief financial officer also banked £2.4m from the sale of his shares.

The stock exchange disclosure also revealed that Mr Duffy has secured a nil-cost option to acquire 2,222,222 ordinary shares “in recognition of the director’s services to the company and to ensure ongoing incentivisation, subject to the director’s continued service with the company.”

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