And could such a secondary share issue be done in Hong Kong rather than on the Singapore bourse?

The assumption behind those questions is that any share issue by GENS would be based upon the asset of RWS. That assumption may be erroneous, as we've seen already with Wynn Macau's listing in Hong Kong, where the bulk of the cash supported the core operation in Las Vegas.

In GEN's case The Genting parent already has investments in other parts of Asia, namely via Star Cruises (Genting Hong Kong) and a 50 percent joint venture holding by Star Cruises in a casino operation at Resorts World Manila in the Philippines.

Why shouldn't Genting take the strategy one step further and get its Singapore unit to invest in assets in another major neighbouring market such as Macau? GENS has had a Hong Kong investment company set up and ready to go since July last year.

That month Genting International PLC (now GENS) announced that it had incorporated Genting Singapore (HK) Limited (GSHK) as its new wholly owned subsidiary in Hong Kong. The principal activities of GSHK were listed at that time as investment, marketing and promotion.

So what would be the point of GENS raising money in Hong Kong? One possibility is that cash raised in Hong Kong by the GENS subsidiary could be used to buy direct stakes in Macau casino operators. Investment in Macau would make sense because of the regional and cultural fit. It certainly makes more sense than GENS having holdings in UK casinos–an historical anomaly and an investment recently sold to the Genting parent.

In theory anyone investing in this GENS Hong Kong vehicle would also gain exposure to RWS in Singapore, and that takes us back to the dilution issue. If RWS investors had wanted exposure to other markets, they would have put their money into the Malaysian parent Genting Group, not into GENS, goes the thinking.

Concern about dilution of existing shareholders was given as one reason why GENS' share price fell 3.1% at the beginning of August. The movement was interpreted by some analysts as stimulated by a sell off due to profit taking while the going was good.

But given that the Macau gaming market has been growing by at least 35 percent this year (when adjustments are made for local market anomalies) it's unlikely many core RWS investors would be complaining.

Purchases by a Singapore company of stakes in Macau gaming operators–provided they are minority stakes–are unlikely to cause any regulatory difficulties for the Macau government. Whether the Singapore government will be as open-minded about GENS possibly buying into Macau, with the latter's exposure to junket operators, is another question.

Even if the aim of a Hong Kong listing were simply to raise cash for the core operation at RWS, it would face less investor resistance in the Hong Kong market than a secondary issue in Singapore. A Hong Kong listing could tap into the latent demand for gaming stocks in that market stimulated by the aggressive growth of Macau.

An alternative GENS cash-raising route–selling off existing shares in its Singapore entity to outside investors–faces significant hurdles in the Lion City. Singapore's Casino Control Act 2006 says any operator wishing to sell more than five percent of its voting shares must seek the express permission of the government. That's in order to ensure that the party or parties that own the casino operator don't change part way through the ten-year licence period.

Given that the timing on Hong Kong listings is determined by the local regulator, it seems doubtful that GENS would be able to get to market with any share offer ahead of MGM International's Initial Public Offering, expected later this year.

Reports of some kind of secondary share issue by GENS must be taken seriously, given that they came from CIMB Singapore, a company that acted as joint financial adviser and joint lead managers for GENS' first rights issue announced in September last year. That raised SD1.63 billion (USD1.14 billion).

http://www.asgam.com/component/k2/item/346-hong-kong-share-issue-for-genting-singapore?.html