The fortunes of some of the biggest US casino operators – and Asia’s gambling hot spot, Macao – seem to be turning after a difficult first half.
Wynn Resorts on Wednesday priced the $1.6bn Hong Kong IPO of its Macao operations at the top end of an indicative range, as investors flocked to the first listing in Hong Kong by a US-based company.
As the FT reports, the US gaming company, controlled by Steve Wynn, plans to sell a 25 per cent stake in its Macao business at HK$10.08 per share, the upper end of a price range of HK$8.52 to HK$10.08, in an IPO being arranged by JPMorgan, Morgan Stanley and UBS.
The strong demand for Wynn came despite recent disappointing performances of new listings in Hong Kong and competition from a flood of upcoming IPOs.
One factor perhaps was that just under 13 per cent of Wynn’s Hong Kong offering has been reserved, according to the FT, for two Hong Kong tycoons, Walter Kwok and Thomas Lau, and two Malaysian tycoons of Chinese descent, Quek Leng Chan and Chua Ma Yu.
Also, as the FT notes, Macao’s casino operators have just had their best ever month in August after gross gaming revenue jumped 17 per cent year-on-year, to a record high of $1.4bn.
But it didn’t look like that earlier this year. Macao’s gaming market, the world’s largest, was monopolised by local tycoon Stanley Ho until 2002, when five other concessions were granted to investors including Wynn and Sheldon Adelson’s Las Vegas Sands Group.
All was going well until early 2009 when, as Lex explained, the ranks of gambling high-rollers on VIP packages began to wane.
The mass-market segment, however, held up reasonably well. Now, another vital boost for Macao’s casino industry has come in the form of China’s recent decision to relax visa restrictions on residents in neighbouring Guangdong province, the former Portuguese colony’s most important feeder market. Guangdong gamblers are now allowed to visit once a month compared to once every three months previously.
Already, Adelson’s Las Vegas Sands – which was forced to put its new Macao project on hold last November in favour of completing its ambitious Singapore casino development – is planning a Hong Kong listing later this year of its Macao business. That would suggest a lot of confidence at LVS in restarting work – and making a success of – its $12bn, 20,000-room hotel and casino complex.
The real test, say analysts, will be if Wynn can buck the recent downward trend for IPOs after it starts trading on October 9.
Related links:
Chinese IPOs - FT.com
Wynn said to raise $1.63bn in HK IPO – Bloomberg