By Michael Flaherty and Sui-Lee Wee
HONG KONG, Sept 30 (Reuters) - Las Vegas casino company Wynn Resorts raised $1.63 billion after pricing its Asian IPO at the top of its indicated range, a sign that demand is still strong for certain offerings despite a glut of Asian stock deals.
Wynn Macau, the fourth-largest global IPO this year, now faces the challenge of its Hong Kong trading debut, where several new listings have been battered by increasingly selective investors.
Wynn Macau sold 1.25 billion Hong Kong-listed shares at HK$10.08 each, or about US $1.30, Wynn Resorts said in a statement. The offering is expected to close around Oct. 9.
The IPO's range was HK$8.52-HK$10.08, with Wynn selling 25 percent of the business to the public.
But some brokers said the high price may make a strong debut more difficult for Wynn.
'The valuations are really high and market sentiment is not that good now,' said Conita Hung, head of equity research for Delta Asia Financial Group. 'I don't expect this to be a good one.'
On a 2010 enterprise value to earnings before interest, tax, depreciation and amortisation ratio (EV/EBITDA), Wynn Macau trades around 16 times, much higher than Macau gambling tycoon Stanley Ho's flagship casino firm SJM Holdings' 7.5 times, according to Credit Suisse analyst Gabriel Chan.
The Macau gambling sector EV/EBITDA average trades at around 14.5 to 19.4 times, Chan said.
'It'll get a big hit,' said Linus Yip, strategist at First Shanghai Securities, referring to the Wynn Macau debut. 'The main concern is the price range.'
'MCC had set its price at the middle of its range, but it still fell below the issue price. Valuations for Wynn are definitely still a concern.'
Last week's dismal debut of Metallurgical Corp of China (MCC), a building and engineering firm, has weighed heavily on investor sentiment for new share offerings in Hong Kong.
Wynn's successful sale also puts pressure on arch-rival Las Vegas Sands, which plans to raise billions of dollars through a public offering in Hong Kong at the end of November or early December.
NOW THE HARD PART
The Wynn Macau offer is especially important given the deal's potential impact on the company's flagship Las Vegas operations. Wynn is hoping a high valuation through the Hong Kong listing will boost valuations at its other divisions.
U.S. casino operators, grappling with high debt levels and a recovering economy, are hoping to boost valuations through spinoffs in China's gambling hub, Macau, the former Portuguese colony located an hour away from Hong Kong by ferry.
Macau now hosts the world's biggest gambling market, which raked in record bets in August.
While institutional and retail demand for Wynn Macau was strong, now comes the hard part: a strong debut that will vindicate those investors who lined up for the offering.
JPMorgan, Morgan Stanley and UBS AG are joint sponsors and global coordinators of the deal, with BofA-Merrill Lynch and Deutsche Bank as joint bookrunners.
Wynn Macau attracted a combined $250 million from several so-called cornerstone investors, or investors who take a substantial stake in the company before the offering, one of the sources said.
Among them is Thomas Lau, billionaire managing director of Lifestyle International, the retailer that operates the Sogo department stores in Hong Kong's Causeway Bay and Tsim Sha Tsui districts and the Jiuguang Department Store in Shanghai.
Another is Walter Kwok, of the Kwok family-run Sun Hung Kai Properties, Asia's largest property group by market value. Malaysia's wealthy Guoco family is also investing in the IPO.
($1=7.749 Hong Kong dollars)
(Additional reporting by Phil Wahba; Editing by Lincoln Feast and Matthew Lewis) Keywords: WYNNMACAU IPO/ (michael.flaherty@thomsonreuters.com; + 852 2843 6540; If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
HONG KONG, Sept 30 (Reuters) - Las Vegas casino company Wynn Resorts raised $1.63 billion after pricing its Asian IPO at the top of its indicated range, a sign that demand is still strong for certain offerings despite a glut of Asian stock deals.
Wynn Macau, the fourth-largest global IPO this year, now faces the challenge of its Hong Kong trading debut, where several new listings have been battered by increasingly selective investors.
Wynn Macau sold 1.25 billion Hong Kong-listed shares at HK$10.08 each, or about US $1.30, Wynn Resorts said in a statement. The offering is expected to close around Oct. 9.
The IPO's range was HK$8.52-HK$10.08, with Wynn selling 25 percent of the business to the public.
But some brokers said the high price may make a strong debut more difficult for Wynn.
'The valuations are really high and market sentiment is not that good now,' said Conita Hung, head of equity research for Delta Asia Financial Group. 'I don't expect this to be a good one.'
On a 2010 enterprise value to earnings before interest, tax, depreciation and amortisation ratio (EV/EBITDA), Wynn Macau trades around 16 times, much higher than Macau gambling tycoon Stanley Ho's flagship casino firm SJM Holdings' 7.5 times, according to Credit Suisse analyst Gabriel Chan.
The Macau gambling sector EV/EBITDA average trades at around 14.5 to 19.4 times, Chan said.
'It'll get a big hit,' said Linus Yip, strategist at First Shanghai Securities, referring to the Wynn Macau debut. 'The main concern is the price range.'
'MCC had set its price at the middle of its range, but it still fell below the issue price. Valuations for Wynn are definitely still a concern.'
Last week's dismal debut of Metallurgical Corp of China (MCC), a building and engineering firm, has weighed heavily on investor sentiment for new share offerings in Hong Kong.
Wynn's successful sale also puts pressure on arch-rival Las Vegas Sands, which plans to raise billions of dollars through a public offering in Hong Kong at the end of November or early December.
NOW THE HARD PART
The Wynn Macau offer is especially important given the deal's potential impact on the company's flagship Las Vegas operations. Wynn is hoping a high valuation through the Hong Kong listing will boost valuations at its other divisions.
U.S. casino operators, grappling with high debt levels and a recovering economy, are hoping to boost valuations through spinoffs in China's gambling hub, Macau, the former Portuguese colony located an hour away from Hong Kong by ferry.
Macau now hosts the world's biggest gambling market, which raked in record bets in August.
While institutional and retail demand for Wynn Macau was strong, now comes the hard part: a strong debut that will vindicate those investors who lined up for the offering.
JPMorgan, Morgan Stanley and UBS AG are joint sponsors and global coordinators of the deal, with BofA-Merrill Lynch and Deutsche Bank as joint bookrunners.
Wynn Macau attracted a combined $250 million from several so-called cornerstone investors, or investors who take a substantial stake in the company before the offering, one of the sources said.
Among them is Thomas Lau, billionaire managing director of Lifestyle International, the retailer that operates the Sogo department stores in Hong Kong's Causeway Bay and Tsim Sha Tsui districts and the Jiuguang Department Store in Shanghai.
Another is Walter Kwok, of the Kwok family-run Sun Hung Kai Properties, Asia's largest property group by market value. Malaysia's wealthy Guoco family is also investing in the IPO.
($1=7.749 Hong Kong dollars)
(Additional reporting by Phil Wahba; Editing by Lincoln Feast and Matthew Lewis) Keywords: WYNNMACAU IPO/ (michael.flaherty@thomsonreuters.com; + 852 2843 6540; If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
