Flying the kite?

Melco Resorts and Entertainment’s decision to file for an initial public offering for its Studio City joint venture took analysts by surprise, with many speculating the proposed listing is being used to fish for a valuation for the resort. Melco owns the Hollywood-themed IR through a partnership with New Cotai Holdings. Analysts have long expected Melco to buy out its partner’s 40 percent stake to gain full ownership, giving it access to the full revenue stream and the potential for operational synergies. However, in August, it filed for an IPO in the U.S. According to some analysts, the filing may be a way of establishing a valuation for the unit prior to a full buyout by Melco after the two sides were unable to reach a price in private negotiations. “It is unclear what the ownership motivations are of both Melco and New Cotai,” says Colin Mansfield, director at Fitch Ratings. “But...

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