Wynn Macau shares jump 13 percent in HK debut

HONG KONG — Billionaire Steve Wynn’s Macau casino company jumped 13 percent in its trading debut on the Hong Kong stock exchange Friday, reflecting stronger faith in the southern Chinese gambling city’s prospects.

Wynn Macau Ltd. shares peaked at 11.40 Hong Kong dollars ($1.47) before falling back to close at HK$10.78, about 7 percent above the initial public offering price. The IPO shares were sold for HK$10.08 each, the high end of the range at which they were marketed to investors, raising $1.63 billion.

Wynn’s Macau resort, whose curved, bronze-tinted tower bears a resemblance to his trademark Las Vegas hotel casino, has been immensely profitable and helped the company weather the downturn in the U.S.

The IPO, representing a 25 percent stake in his Macau operations, was Hong Kong’s second-biggest of the year and among its most watched due partly to the novelty of a famous, high-end American company deciding to list on the Chinese financial center’s exchange.

“We have become more of a Chinese company, something that Mr. Wynn … always wanted,” Allan Zeman, a Wynn Macau director and Hong Kong businessman, said at the stock exchange before trading opened. Wynn, 67, who visited the region recently to promote the offering, was not on hand.

Las Vegas-based Wynn’s second Macau resort, called Encore, is due to open next year. He’s also mulling a third property on 52 acres in the city’s growing Cotai area and has already applied for government approval to build a resort of nearly 5 million square feet.

The IPO precedes a similar move by Las Vegas Sands Corp., led by tycoon and Wynn rival Sheldon Adelson, who is expected to sell $2 billion of shares in his company’s Macau operations and list them on Hong Kong’s stock exchange.

The robust demand for Wynn’s stock defied expectations after several recent Hong Kong IPOs flopped in their first days of trading and analysts said the offering was sold at a relatively high premium compared to other casino companies.

That may have been partly because of better investor sentiment following this year’s revival in Macau, the world’s most lucrative casino market and the one place in China where gambling is legal.

Revenue growth started tapering off during the depths of the economic crisis but has picked up in recent months thanks to a stronger Chinese economy and an easing of visa restrictions on mainland gamblers who are the lifeblood of the city’s casinos. In August, the enclave had its best month ever, raking in almost 11.4 billion patacas ($1.4 billion). Early reports suggest September was even better with over 50 percent growth compared with the same period last year.

“People are quite bullish about Macau right now,” said Gabriel Chan, an analyst at Credit Suisse in Hong Kong. “And people are still giving Wynn the benefit of the doubt that he can win market share.”

Wynn currently holds about 14 percent of the local gambling market, making it Macau’s No. 4 operator, according to Chan. The majority of its revenue comes from VIP gamblers who wager big at table games, mostly baccarat. Profits for the first six months of this year stood at around $115 million.

Helping Wynn’s offering, which was oversubscribed, was backing from some of Asia’s richest men. Among the tycoons who bought shares were Hong Kong property magnate Walter Kwok and billionaire Malaysian investor Chua Ma Yu.

Macau is located an hour’s ferry ride from Hong Kong.

Wynn’s U.S. shares climbed 3.8 percent to $69.91 in New York trade Thursday.