Las Vegas Sands (LVS) Macau unit, Sand China raised $2.5 billion through its Hong Kong initial public offering (IPO). The company has priced the IPO for 1.87 billion shares at HK$10.38 per share, the low end of the expected HK$10.38-HK$13.88 range.
The proceeds from this offering, combined with $1.75 billion in bank financing, would aid Sands China to restart its Macau’s Cotai Strip construction projects. Last year, the company was forced to halt its casino expansion projects in Macau due to financial constraints, at which time it laid off 11,000 workers.
The IPO is being handled by five investment banks. Citigroup (C) and Goldman Sachs (GS) are the joint global coordinators for the offer while Barclays PLC (BCS), BNP Paribas SA and UBS AG (UBS) are the underwriters.
Earlier, in October, rival company Wynn Resorts (WYNN) had held its IPO for its Macau assets. Wynn Macau has experienced a strong debut in the Hong Kong stock exchange. Wynn sold 1.25 billion shares or a 25% stake in its Macau business. However, the shares of Wynn Macau are now trading at a discount to the offering price.
Macau is the only Chinese city where gambling is legal. It has become an attractive destination for casino companies such as Las Vegas Sands, Wynn Resorts and MGM Mirage (MGM), which are investing billions for expansion on this island. Macau has survived the economic downturn relatively well.
Macau has generated HK$105.6 billion ($13.5 billion) of gross gaming revenue in 2008, more than double the revenue generated by the Las Vegas strip. Also, visa restrictions had recently been slackened by Beijing to allow mainland tourists to visit Macau once a month rather than twice a year.
The capital bolstering initiatives augur well for Las Vegas Sands, which has a robust development pipeline, with projects in Macau, Las Vegas, Singapore and Pennsylvania.
Read the full analyst report on “LVS”
Read the full analyst report on “MGM”
Read the full analyst report on “WYNN”
Read the full analyst report on “C”
Read the full analyst report on “GS”
Read the full analyst report on “BCS”
Read the full analyst report on “UBS”
Zacks Investment Research
