Nov. 9 (Bloomberg) -- Sands China Ltd., the Macau unit of billionaire Sheldon Adelson’s casino company, plans to raise as much as HK$26 billion ($3.4 billion) in a Hong Kong initial share sale, three people familiar with the matter said.

The offering consists of 1.87 billion shares, a 23.4 percent stake, priced between HK$10.38 and HK$13.88 each, according to the people, who declined to be identified because the pricing isn’t public. The sale values Sands China at as much as HK$111 billion, or 16.6 times next year’s estimated earnings before interest, tax, depreciation and amortization.

The fundraising will help Adelson’s Las Vegas Sands Corp. restart construction on a 13.3 million square foot resort in Macau, the world’s biggest gaming hub, and strengthen the challenge it poses to casino billionaire Stanley Ho. The initial public offering may be Hong Kong’s second biggest this year, according to data compiled by Bloomberg.

“There are so many IPOs coming up, and we don’t know how long loan growth in China can last,” Gabriel Chan, an analyst at Credit Suisse Group AG in Hong Kong, said by phone today. “It’s better to do it now than later.”

BNP Paribas SA, Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc. and UBS AG are managing the offering. Las Vegas Sands spokesman Ron Reese declined to comment on the IPO pricing.

Wynn Macau

Sands China joins rival Wynn Macau Ltd. in selling shares in Hong Kong after other locally traded casino operators surged this year. Wynn’s valuation was 14.5 times next year’s earnings before interest, tax, depreciation and amortization as estimated by banks involved in the sale.

Las Vegas Sands has gained 159 percent in market value this year, after dropping 94 percent in 2008. The stock fell 0.8 percent to $15.35 on Nov. 6.

Casino revenue in Macau may reach a record this year as record lending and an economic recovery in China boost visits by mainland Chinese, more than half of arrivals. Revenue rose 22 percent in the third quarter from the same period in 2008, the first gain in a year. Sands’ Venetian Macao is the world’s biggest casino.

“The problem is they don’t have enough funding to complete parcels 5 and 6 and they still have to raise funds after the IPO,” Chan said. Construction on the two parcels had “capitalized construction costs” of $1.7 billion as of June 30, and Sands estimates completion costs at a further $2.2 billion.

SJM, Galaxy

The two phases consist of 670 gambling tables, 2,200 slot machines and 6,000 hotel rooms that will carry the Shangri-La, Traders and Sheraton brands. The unfinished buildings are across the street from Sands’ Venetian Macao casino resort and next to Melco Crown Entertainment Ltd.’s City of Dreams.

Stanley Ho’s SJM Holdings Ltd., which has the biggest market share in Macau, rose 7.5 percent to close at HK$4.45 in Hong Kong, boosting its gain this year to 163 percent.

Galaxy Entertainment Group Ltd., the Macau casino operator whose market value has more than tripled this year, gained 9.4 percent to HK$3.83. Melco International, controlled by Ho’s son Lawrence, gained 6.5 percent to HK$4.43.

Wynn Macau, which raised HK$14.5 billion in its initial public offering, rose 3.6 percent to HK$10.30.

Macau’s gambling revenue may grow 10 percent next year, Nomura analyst Kenneth Fong said in a phone interview today.

‘Supplemental Financing’

Sands China has the second-biggest market share of Macau’s gaming revenue, at less than 20 percent in September, after SJM, Portuguese news service Lusa said last month. The report didn’t give market shares for October.

Earnings before interest, tax, depreciation, appreciation and rent reached about $100 million in the first 26 days of October, the “strongest monthly” performance since started operating in Macau five years ago, Adelson told analysts on an Oct. 30 conference call.

Sands China plans to use part of the funds from the share sale and “supplemental financing” it is seeking from a group of lenders to restart construction on a 13.3 million square foot integrated resort, the company said in a draft IPO prospectus.

Sands China’s IPO may rank second in size in Hong Kong this year to that of China Minsheng Banking Corp., which seeks to raise as much as HK$31.54 billion, according to two people familiar with the lender’s plan.

Lending in China swelled to a record $1.27 trillion this year after the government eased restrictions to help boost the economy, which rebounded to 8.9 percent in the third quarter.

The Shanghai Composite Index has surged 74 percent this year after China enacted a $586 billion stimulus plan, lowered banks’ cash reserve requirements and reduced the one-year lending rate to a five-year low. Hong Kong’s benchmark Hang Seng Index has gained 54 percent this year.

To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net

Last Updated: November 9, 2009 03:58 EST