HONG KONG - Canadian casino company Asian Coast Development Ltd. is considering a $1-billion US initial public offering in Hong Kong in the next two years to fund its plans for a mammoth gambling resort in Vietnam.

The Vancouver-based company will not be rushed into raising further capital and is eyeing a possible IPO as one of only several ways to help fund its $4.2-billion five-hotel project in the developing Southeast Asian country, a spokesperson said

An IPO on the Hong Kong stock exchange would come only “if the market conditions are right,” he added in a telephone interview from Vietnam.

Recently, investors in Hong Kong have been betting against the casino sector, and the appetite for a casino IPO in the immediate future would be “not strong,” said Billy Ng, an analyst with JPMorgan in Hong Kong. An IPO would be “close to impossible” in the near term and uncertain after that, he added.

According to accountants PricewaterhouseCoopers, Asia-Pacific is the world’s fastest-growing gambling region, with casino-based gambling revenues expected to more than double to $34.4 billion US up from $16.5 billion in 2007. Hong Kong’s near-neighbour Macau has already surpassed Las Vegas as the world’s biggest gaming hub.

But there are concerns about many of the Hong Kong-listed Macau casino companies because rapid development has lead to fears about irrational competition. There are also concerns that Beijing has slowed the pace of approval for new projects on the island, and imposed restrictions on visits by mainlanders.

This week, Citigroup’s gaming analysts in Hong Kong Anil Daswani and George Choi reported stocks across the sector have fallen 44 per cent so far this year. Citigroup initiated coverage on tycoon Stanley Ho’s SJM Holdings with a “sell” recommendation. SJM - which plans to spend $2.6 billion US on building four casinos in Macau - has seen its stock fall to less than two thirds of the price of the company’s undersubscribed $525-million US share sale in July.

“We’re looking toward the Hong Kong stock exchange in the next two years,” Asian Coast Development chairman Michael Aymong said in an interview with Bloomberg in Singapore this week. “The people of Hong Kong know the casino industry because of Macau, and they have seen the economic growth of the region and understand it.”

The first phase of the project, to be built on the Ho Tram Strip about 80 kilometres from Ho Chi Minh City, is scheduled for completion in 2010.

Under-developed Vietnam - the site of Asian Coast’s planned resort - is a far cry from the crowded Macau gaming scene, which has already attracted massive investment from Vegas casino operators. But whether in Macau, Vegas or Vietnam, all casinos are tarred with the same brush by investors right now because of fears a global economic downturn will put a dent in visitor numbers, said Ng.

Vietnam has had one of the fastest growing economies in Southeast Asia in recent years, up 8.5 per cent in 2007 alone.  However, the country has more recently seen soaring inflation, falling stock prices and concerns about the short-term stability of its banking sector. Nevertheless, Vietnam continues to attract interest from foreign investors looking for Asia’s next economic tiger, with global banks Standard Chartered and HSBC among the latest to announce plans to expand in the communist country.

Canada Financial Post