Stanley Ho's IPO loses $$$

Jun 24, 2008 7:00 PM

by Ray Poirier | Four decades of controlling a gaming monopoly in Macau made octogenarian Stanley Ho one of the world’s richest men with a net worth of some $8 billion.

Then the Macau government stepped in and offered casino licenses to foreign investors such as Las Vegas Sands Corp. (LVS) and Wynn Resorts Ltd. (WYNN).

Ho saw his 100% market share of Macau gambling fall to less than 50% as the glitzy Las Vegas-styled casinos came on line, as well as those developed by Galaxy Entertainment and Melco Entertainment Ltd. (MPEL), a partnership involving Australia’s richest man, James Packer, and Stanley Ho’s son, Edward.

But in recent weeks, according to recent estimates, Ho’s 18 casinos, listed under his casino flagship, Sociedade de Jogos de Macau (SJM), has seen a further decline in market share, falling to a reported 28%.

This has resulted in a planned $1 billion stock sale in Ho’s initial public offering (IPO) falling to an estimated value of between $494 million and $654 million.

Actually, Ho had planned the IPO last year but litigation instituted by his feisty sister, Winnie Ho, disputing the ownership of Stanley’s Sociedade de Turismo e Diversoes de Macau (STDM), delayed the offering.

A further postponement took place in January when market conditions worsened, according to the company’s financial advisor, Deutsche Bank.

Finally, the company announced it was making an offering of 1.25 billion new shares, or 25% of the enlarged company at a Hong Kong price of $3.08 to 4.08 per share.

"The weak market sentiment has made investors pull out money from the market and the recent lackluster performance of IPOs has also made them reluctant to buy into new offerings," according to a market strategist.

Deutsche Bank said it expects SJM’s net profit in 2008 to be about $1.53 billion in Hong Kong dollars, or about the same as last year. It also expects the company to hold a market share above 18%.

Another of Stanley Ho’s family members, daughter Pansy Ho, is a partner with MGM MIRAGE Inc. (MGM) in another Macau casino, the MGM Macau. The partnership of Pansy Ho and the Las Vegas-based gaming company has been approved by Nevada gaming regulators but is still awaiting regulatory action in New Jersey.