MGM China Holdings Ltd., the Macau venture between the biggest casino owner on the Las Vegas Strip and billionaire Stanley Ho’s daughter, filed a preliminary application for an initial public offering in Hong Kong.
The venture between MGM Resorts International and Pansy Ho submitted a proposed listing application with the Hong Kong Stock Exchange yesterday, according to a filing to the U.S. Securities and Exchange Commission. No decision has been made about when to hold the share sale or how much to raise, according to the statement.
MGM Chief Executive Officer Jim Murren said in August he plans to build “multiple properties” in Macau, where total casino revenue has surged 63 percent this year through August. The MGM venture has the smallest market share of the six casino operators in the world’s biggest gambling hub, according to estimates by CLSA Ltd. analyst Aaron Fischer.
“We designed this joint venture to go public,” Murren said today in an interview in Las Vegas. “It’s happening at a time when the Macau market is obviously large and growing. We like our how we’re positioned there.”
The listing plan is “modestly bullish” for MGM Resorts, David Katz, an analyst at Jefferies & Co. in New York, wrote in a note to investors today.
“Management has indicated previously its intention to pursue an IPO of 25 percent of its Macau assets, which we expect to generate $300 million for MGM’s 50 percent share,” he wrote.
MGM Resorts rose 1.7 percent to close at $11.44 in New York trading today, boosting its gain this year to 25 percent. Las Vegas Sands Corp., the world’s biggest casino operator by market value, rose 1.4 percent to $35.59 and has more than doubled.
Sands China, SJM
If the share sale proceeds, MGM China will become the owner of MGM Grand Paradise SA, which operates the MGM Macau casino resort, according to the statement. Murren said in March he was “confident” the share sale would be done in the third quarter.
Sands China Ltd., the Macau unit of billionaire Sheldon Adelson’s company, gained 2 percent to HK$13.36 in Hong Kong trading. Stanley Ho’s SJM Holdings Ltd., which has the biggest market share in Macau according to CLSA’s Fischer, slid 4 percent to HK$8.74.
MGM Grand Paradise said Aug. 2 it agreed to a $950 million loan to refinance existing debt and provide added liquidity.
Casino revenue in Macau may grow as much as 40 percent this month to about $2 billion from a year earlier, Gary Pinge, regional head for consumer and gaming research at Macquarie Group Ltd. in Hong Kong, wrote in a Sept. 14 note to clients.
Macau surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006.
Macau casino revenue rose 40 percent to 15.8 billion patacas ($2 billion) in August, according to the city’s Gaming Inspection and Coordination Bureau. Casino sales for the year through August totaled 117.9 billion patacas.