At HK$15 each, casino venture worth HK$11.66b; all proceeds to go to Ho

MGM China Holdings Ltd, the casino venture between MGM Resorts International and Pansy Ho, priced shares in a Hong Kong initial public offering (IPO) at HK$15.34 each, the top end of a range marketed to investors.

The company released the pricing in a statement to the Hong Kong Stock Exchange on Friday. MGM China originally offered 760 million shares at HK$12.36-HK$15.34 apiece, according to the prospectus for the sale. At the offer price, the casino operator is valued at HK$11.66 billion.

All net proceeds of the IPO will go to Ho, the daughter of Macao billionaire Stanley Ho who is selling down her interest in the 50-50 joint venture, the prospectus shows. MGM China launched the sale after casino gambling revenue in Macao rose 58 percent last year to 188.3 billion patacas ($23.5 billion), about four times that of the Las Vegas Strip.

Pansy Ho's stake in MGM China will decrease to 29 percent from 50 percent upon completion of the IPO, Las Vegas-based MGM Resorts said in an April 13 statement. She may exercise an overallotment option to further reduce her interest to 26 percent, the statement said.

Bank of America Corp, JPMorgan Chase & Co and Morgan Stanley are the global coordinators for the sale, according to the prospectus. BNP Paribas, CLSA Ltd, Deutsche Bank AG and Royal Bank of Scotland Group Plc are joint bookrunners, the document shows.

Ho, 48, is chairwoman and executive director of MGM China, according to a May 9 filing to the exchange. Her 89-year-old father held a gambling monopoly in Macao for four decades before the government in 2002 allowed the entry of foreign players including Las Vegas Sands Corp and Wynn Resorts Ltd.

Sands China Ltd, the Hong Kong-listed unit of billionaire Sheldon Adelson's Las Vegas-based company, has gained 92 percent in a year while Wynn Macau Ltd's market value more than doubled.

Paulson & Co, the $36 billion hedge fund founded by John Paulson, agreed to buy $75 million of shares in MGM China's initial offering, according to the prospectus. MGM Resorts founder and biggest shareholder Kirk Kerkorian and a trust fund controlled by Hong Kong property magnate Walter Kwok also committed to buying stock, the prospectus shows.

Casino revenue in Macao climbed 43 percent to 79 billion patacas in the first four months of this year, according to data from Macao's Gaming Inspection and Coordination Bureau. Macao gambling revenue may rise 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.

Bloomberg News

(HK Edition 05/28/2011 page3)