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Wynn Seeks $1.63 Billion for Macau

Written by:
Guest
Published on:
Sep/20/2009

(Bloomberg) -- Wynn Resorts Ltd. plans to raise as much as HK$12.6 billion ($1.63 billion) in a Hong Kong initial public offering of its Macau casino assets, two people familiar with the matter said.

Wynn plans to sell 1.25 billion shares for between HK$8.52 and HK$10.08 apiece, the two people said, asking not to be identified because the information is confidential. The sale represents about 25 percent of the Macau business, they said.

The Las Vegas-based company is tapping investor optimism that China will later this year make it easier for its citizens to travel to Macau, the world's biggest gambling hub. Hong Kong shares of Macau casino operators Galaxy Entertainment Group Ltd., SJM Holdings Ltd. and Melco International Development Ltd. have more than doubled this year.

"Macau as a sector is very interesting, very attractive, particularly with all the Chinese tourists," Desmond Tjiang, chief investment officer for Asia excluding Japan at Fortis Investments, which oversaw $4 billion as of April. "There are still a lot of unknowns regarding the supply of gaming tables" and the government's visa policy, he said.

JPMorgan Chase & Co., Morgan Stanley and UBS AG were hired to manage the sale, and will begin offering the stock to investors today. The price is due to be fixed on Oct. 2, a banker with knowledge of the matter said earlier this month. The target size of the sale was earlier reported at about $1 billion.

Global investors are likely to be drawn to the IPO as it's the first foreign casino operator to be listed in Hong Kong, said Steven Leung, an institutional trader at UOB-Kay Hian Ltd.

Bright Spot

Earnings at Wynn Resorts, founded by Stephen Wynn, have fallen for the past two years as a global economic slowdown hurt travel and spending at the company's Las Vegas casinos and hotels. In contrast, net income at Wynn's Macau operations rose 48 percent last year as gambling revenue in the only Chinese region where casinos are legal climbed.

In August, gambling revenue in Macau rose 17 percent to a record 11.3 billion patacas ($1.4 billion), Portuguese news agency Lusa reported Sept. 1.

Wynn's net income from its Macau operations may rise 17 percent next year to HK$2.31 billion, UBS AG analysts Grant Chum and Gary Ngan said in a Sept. 11 report.

In the third quarter of 2006, Macau provided $45 million in revenue for Wynn's, against $273 million from the company's Nevada operations. Within nine months, Macau was the bigger money spinner, and by the second quarter of last year, gamblers in the former Portuguese enclave splurged $530 million at Wynn's tables and hotels, against $295 million in Nevada, according to data compiled by Bloomberg.

Shares in Galaxy, the Macau casino operator part owned by Permira Advisers LLP, have more than tripled this year. SJM Holdings, controlled by billionaire Stanley Ho, and son Lawrence's Melco, have each more than doubled.

 

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