MGM China Said to Gauge Demand for $1.5 Billion Stock Sale
Stock Chart for MGM Resorts International (MGM)
MGM China Holdings Ltd., the casino joint venture between MGM Resorts International (MGM) and Pansy Ho, may raise as much as $1.5 billion in its Hong Kong initial public offering, two people with knowledge of the matter said.
The Macau casino operator began gauging investors’ demand today and aims to start trading on June 3, said the people, who declined to be identified because the information is private. Stock worth $1 billion to $1.5 billion may be offered in the sale, they said.
MGM China is selling shares as rivals including Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) said first-quarter revenue from Macau, the only place in China where casinos are legal, surged. Gambling revenue in the former Portuguese colony soared 58 percent last year to 188.3 billion patacas ($23.5 billion), about four times that of the Las Vegas Strip.
“It’s very good timing for MGM to sell stock with Macau casinos posting record profits,” said Kenny Tang, Hong Kong- based executive director of AMTD Financial Planning Ltd., “Demand still outstrips supply in Macau’s gambling market and people expect revenue to climb further.”
MGM China’s management will start meeting potential investors on May 17 to market the offering, the people with knowledge of the matter said. Bank of America Corp.’s Merrill Lynch unit, JPMorgan Chase & Co. (JPM), and Morgan Stanley are managing the sale. Sidney Luk, a Hong Kong-based spokeswoman for MGM China, declined to comment.
The company had planned to raise about $800 million, according to two people with knowledge of the matter in April.
Pansy Ho’s father, billionaire Stanley Ho, held a gambling monopoly in Macau for four decades before the entry of foreign casino operators starting from 2002. Casino revenue in Macau climbed 43 percent to 79 billion patacas in the first four months of this year, according to data from the city’s Gaming Inspection and Coordination Bureau.
Macau gambling revenue may gain by more than 25 percent in 2011, cementing the city’s position as the world’s biggest gambling hub by sales, Standard & Poor’s credit analyst Joe Poon said in a report.
MGM Resorts, founded by Kirk Kerkorian, would gain control of MGM China by acquiring shares from Pansy Ho, the U.S. company said in a statement on April 13. Pansy Ho would sell 1 percent of MGM China Holdings Ltd. to Kerkorian’s company, lifting his stake in the venture to 51 percent, according to the release.
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