In going public, Zegna, the 110-year-old Italian luxury brand best known for its high end power suits, chose an method very much in vogue at the moment: it merged with a special purpose acquisition company (SPAC) created by Investindustrial, which is led by former UBS chief executive Sergio Ermotti. It trades in New York under the “ZGN” ticker.

The IPO’s shares priced at $10 on Friday, giving Zegna a $2.4 billion market capitalization. By Tuesday afternoon, Zegna shares were up to $10.78 on day in which the overall market was down 2%. Last summer, Zegna had indicated its intention to go public via SPAC and estimated a market cap of $3 billion.

Yet despite falling short of its initial estimates for the IPO, Zegna’s stock rise does signal that investors believe luxury will continue its torrid growth, and that by going public, Zegna gave itself a war chest with which to grow and weather any new downturns. Bain & Co recently estimated that the personal luxury goods market rose 29% globally this year amid the arrival of vaccines and the re-opening of many luxe markets. That helped buoy the sector’s stocks: LVMH shares are up 33% this year, while Gucci-parent Kering’s are up 16%. (However, not all luxury stocks did well this year: online retailers My Theresa and Farfetch shares have fallen 41% and 50% so far this year.)

But Zegna, which should take in about $1.3 billion in revenue this year, is tiny compared to those rivals, which weathered the 2020 far better than smaller companies. The IPO generated about $761 million in new funding even as the founding Zegna family retains a 66% stake in a company that started in 1910 as a textile company.

That additional firepower is aimed at helping Zegna, which also owns the Thom Browne brand, to further expand in China and the United States, the two leading luxury markets in the world by far. Like many other European niche players, Zegna preferred for years to stay private. But the soaring stock market and the need for a bigger war chest made an IPO via SPAC seem ideal for Zegna, while giving other European brands ideas about financing options.

“We could have remained private for another 100 years, but the timing was perfect and the world of luxury has become very challenging,” Chief Executive Gildo Zegna told reporters last summer. In July, Etro sold a majority stake to LVMH-backed fund L Catterton, while Giorgio Armani, was considering joining forces with another Italian company.

Along with going public, Zegna is making important changes to its business. For one thing, it is looking to become less reliant on the formal wear that has long been its hallmark and more on high end casual clothing like cashmere turtlenecks. Meanwhile it’s refocusing on the high end by melding three lines into a single luxury collection at higher prices, it said last month) It is also dropping the first word of the brand’s name to just be known as Zegna, and updating it digital business.

While Italian brands have generally opted to listed shares on the Milan or Hong Kong stock markets, the company’s CEO Gildo Zegna sees listing in New York as a reflection of its desire to play in the major leagues, because NYSE is “the biggest, the most powerful international stock exchange in the world,” as he told the New York Times.