Pansy ho's bet on MGM China pays billions

How do you turn US$5 million into US$1.5 billion? Take one Macau gaming licence, one Las Vegas casino company and add one soon-to-be super wealthy Hong Kong businesswoman: Pansy Ho Chiu-king.

Ho's pending sale of a 20 per cent stake in MGM China Holdings via a local initial public offering will catapult her into the ranks of Hong Kong's wealthiest people with a net worth of about US$5.1 billion, based on a South China Morning Post analysis of her holdings.

At 48, the divorced daughter of Macau gaming magnate Stanley Ho Hung-sun is set to become both the youngest person among Hong Kong's wealthiest 20 people and the richest woman in town - albeit by handing 51 per cent control of MGM China to her Las Vegas-based partner, MGM Resorts International.

Ho will keep 26 to 29 per cent of what was previously a 50-50 partnership. 'I believe to be an MVP or most valuable player, like in a ball game, you don't always have to be the one who is making the goals,' Ho told reporters yesterday at a news conference held in a hotel ballroom.

Flanked by MGM Resorts chairman Jim Murren and MGM China chief executive Grant Bowie and sporting a diamond-encrusted brooch that sprouted like a cauliflower, Ho looked every bit the multibillionaire-in-waiting.

'We can each focus on what we think we can do best,' she said. 'In my case, that is mainly on the strategic plane, to be there to help ... MGM China in its further exploration of opportunities in Macau.'

Ho's rapid rise to the ranks of the mega-rich started seven years ago, when she and her sister, Daisy Ho Chiu-fung, formed the Macau gaming joint venture with US billionaire investor Kirk Kerkorian's MGM Resorts (then MGM Mirage).

The partners decided to kick in initial equity of US$360 million - but MGM's share was set at US$280 million to reflect a US$100 million premium it agreed to pay in order to be in business with Ho in Macau. Pansy and Daisy thus had to come up with the remaining US$80 million. Of that, US$72 million comes from their father, according to a 2009 report by gaming regulators in the US state of New Jersey. From their personal bank accounts, Pansy contributed US$5 million to establish the joint venture while Daisy contributed US$3 million, the report said.

Part of Pansy's return on the US$5 million will be the US$1.21 billion to US$1.5 billion she will raise by selling 760 million shares, or a 20 per cent stake, in MGM China at HK$12.36 to HK$15.34 per share, an offer that closes next Thursday.

The deal includes an over-allotment option for Ho to sell 114 million additional shares, which would net her US$224.58 million if priced at the top of the range. At the top end, the US$1.5 billion in offer cash proceeds represents an annualised return on investment to Ho of 4,928 per cent since 2004, when she put the US$5 million into the venture.

And that is only the cash. After the offer closes, assuming no over-allotment and a middle-of-the range pricing at HK$13.85 per share, Ho's remaining 29 per cent stake in MGM China will be worth HK$15.26 billion.

According to MGM China's draft prospectus, Ho also has indirect, effective stakes in Shun Tak Holdings (11 per cent) and SJM Holdings (2.1 per cent) that were worth a combined HK$13.97 billion based on yesterday's closing share prices.

With her post-offering windfall, Ho ranks the equivalent of eighth or ninth on the Forbes list of Hong Kong's 40 richest people published in January. (Her father ranked 13th).

Lady of fortune

Pansy Ho's estimated net worth:: US$5.1b (HK$39.76b)

(NOTE: below is based on midpoint pricing of MGM China IPO @ HK$13.85 per share):

Cash from IPO: HK$10.53 b

MGM China remaining stake (29%): HK$15.26 b

Shun Tak stake (indirect, effective stake of 11%): HK$11.92 b

SJM (indirect, effective stake of 2.1%): HK$2.05 b

Source: MGM China, Bloomberg, SCMP