Permira gets double for Galaxy stake

Permira Advisers LLP sold part of its stake in Macau casino operator Galaxy Entertainment Group Ltd., founded by billionaire Lui Che-Woo, for about twice what the London-based buyout firm paid for the shares.
The 270 million shares were sold at HKD 17.70 each, or a total of about HKD 4.78 billion (USD 614 million), Permira said in a statement yesterday. That’s at a 5.1 percent discount to Galaxy’s closing price on Thursday, and at the low end of the HKD 17.70 to HKD 18.10 range at which the shares were offered, according to a term sheet obtained by Bloomberg News.
Permira, which manages a 9.6 billion-euro (USD 13.7 billion) leveraged buyout fund, bought a 20 percent stake in Hong Kong-listed Galaxy in October 2007 for HKD 6.5 billion or HKD 8.42 per share.
The company didn’t disclose its return on the investment, but retains a 12.8 percent stake in the company, according to the statement.
The company this year started weighing a sale of some of its Galaxy shares, which have more than doubled this year, people with knowledge of the matter said in June. The firm is seeking to return cash to investors as it prepares to raise a new 6.5 billion-euro fund.
“The selling time is just about right,” said Teng Yee Tan, an analyst at CIMB-GK Securities in Hong Kong who rates the stock “outperform”. “It is a pure exit strategy by Permira after reaping considerable gains from the investment,” he added quoted by Bloomberg.
Macau’s gambling revenue may increase by 30 percent to 40 percent this year, Francis Lui, deputy chairman of Galaxy Entertainment Group Ltd., said on August 31, at a press conference in Hong Kong.
The stock slumped as much as 8.5 percent in Hong Kong trading, the biggest intraday decline since August 22, to HKD 17.08, and closed at HKD 17.68, down 5.25 percent.