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Best of Howard Stutz

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Howard Stutz
 

Hong Kong analysts confident on MGM Macau IPO

10 May 2011

MACAU -- MGM Resorts International has begun premarketing its initial public offering on the Hong Kong Stock Exchange, which could raise more than $1 billion.

Reuters in Hong Kong reported that the pricing for the IPO is expected to be released May 27.

On Monday, MGM Resorts filed with the U.S. Securities and Exchange Commission a lengthy Web Proof Information Packet covering the IPO submitted to the Hong Kong Stock Exchange, allowing potential investors to study the stock offering.

"We have been continuing to make progress with the Hong Kong Exchange as part of this listing and we've been responding to their inquiries and comments," MGM Resorts Chairman and CEO Jim Murren said during the company's quarterly earnings conference call last week.

Bloomberg News Service in Hong Kong reported MGM Resorts hopes its MGM China Holdings subsidiary will begin trading on the Hong Kong Stock Exchange in June, and said two people with knowledge of the IPO expect it to raise $1 billion to $1.5 billion. Analysts in the past have said the IPO could raise $500 million to $800 million.

Similar IPOs on the Hong Kong exchange in 2009 raised $2.5 billion for Las Vegas Sands Corp. and $1.63 billion for Wynn Resorts Ltd.

Under terms of the MGM Resorts filing, Hong Kong businesswoman Pansy Ho, the company's joint-venture partner in the MGM Grand Macau, gave the U.S. casino operator a majority stake in the IPO.

Under the agreement MGM Resorts and Ho signed April 13, MGM Resorts will own 51 percent of MGM China after the Hong Kong IPO. Ho would retain a 29 percent interest. MGM and Ho each own a 50 percent stake in the 600-room hotel-casino.

Murren said MGM Resorts gaining a controlling stake in the Macau casino was a key aspect of the IPO.

"It also strengthens our bonds with Pansy Ho, which we like, and we're doing more with her in China," Murren said. "In fact, as you know, it's part of this deal she is investing a significant amount of her money into MGM Resorts."

Asian stock analysts told news outlets that Macau's booming gambling market shows no sign of slowing. Gaming revenues exceeded $23.5 billion in 2010 and hit a one-month record of $2.6 billion in April.

"It's very good timing for MGM to sell stock with Macau casinos posting record profits," Kenny Tang, Hong Kong-based executive director of AMTD Financial Planning Ltd., told Bloomberg News. "Demand still outstrips supply in Macau's gambling market and people expect revenue to climb further."
Hong Kong analysts confident on MGM Macau IPO is republished from Online.CasinoCity.com.