Casino-hotel operator Macau Legend Development is pitching investors to raise capital for its rapid expansion in what has become the world's biggest gambling capital.
Apart from moderate growth in Macau's gaming revenue, the biggest downside of the company is that it does not own casino concessions and relies on its partnership with Sociedade de Jogos de Macau (SJM), which provides dealers and gaming tables under a private agreement.
Macau Legend, which is controlled by former Macau lawmaker David Chow Kam-fai, aims to raise about US$608 million by selling 2 billion shares, or 29 per cent of its enlarged share capital. The shares, of which 282.5 million are old, will be priced at between HK$2.30 and HK$2.98 each.
The shares will be open to retail subscription from June 17 to 20 and begin trading on June 27.
SJM, the oldest gaming operator controlled by Stanley Ho Hung-sun, owns a concession contract that will expire in March 2020. The Macau government may redeem the concession by providing SJM with at least one year's written notice, according to the listing document.
It remains unclear how SJM and other gaming firms will renew their licences as the bidding process is opaque to the general public. In 2002, the government broke the monopoly of SJM by opening up the gaming market to other operators.
Following on Macau's runaway success as a gaming centre, other regional players such as Singapore, the Philippines and Cambodia have opened casinos to capture a slice of the Chinese gaming expenditure.
Macau Legend is expected to be allocated a further 350 gaming tables in its own right from 146. It appointed Carl Tong Ka-wing, whose younger brother is the chairman of the Securities and Futures Commission, Carlson Tong Ka-shing, as a co-chairman and non-executive director in May last year.
Carl Tong had no direct or relevant experience in running a casino and hotel company before the appointment.
In a bid to rein in explosive gaming growth, the Macau government set a cap of 5,500 gaming tables until the end of this year and limited the annual increase to 3 per cent thereafter. But official data suggests that the city had 5,685 gaming tables at the end of last year, highlighting the doubtful legal framework and bureaucratic government system in the city.
Macau Legend's capital expenditure plan will focus on developing and revamping at least three hotels, which should boost its hotel and other non-gaming revenue substantially. It owns the Landmark Hotel and Macau Fisherman's Wharf.
Gross gaming revenue, including both VIP and retail markets, rose 13.5 per cent from a year earlier to 29.6 billion patacas last month, the second-highest month on record.
Revenue rose 14.5 per cent in the first five months, compared with the same period last year, but the pace was much slower than the average expansion of more than 40 per cent in the past three years.