UPDATE 2-Retail investors seek refunds of Stanley Ho IPO shares

(Adds fund manager comment on preview of SJM's trading debut) (For an expanded IPO diary, click <HK/IPOMENU>)

By Kennix Chim and Tony Munroe

HONG KONG, July 15 (Reuters) - Tycoon Stanley Ho's Macau casino flagship is set to make its trading debut on Wednesday in a dismal market, after the company said that individual investors withdrew applications for more than half of their IPO shares following a delay in the listing last week.

Sociedade de Jogos de Macau (SJM), which raised $494 million, also said it plans to proceed with its Wednesday debut regardless of the outcome of a legal claim by Ho's estranged sister, Winnie Ho, who is trying to stop the deal.

Hong Kong's Court of Appeal dismissed a claim later on Tuesday by Winnie Ho seeking to have the listing halted. Her spokeswoman, Donna Yau, said Winnie Ho planned to bring her case to Hong Kong's Court of Final Appeal.

SJM, the 86-year-old Stanley Ho's gaming flagship, has had a tumultuous journey to its initial public offering. The deal's timing could hardly be more difficult.

Hong Kong's benchmark Hang Seng Index .HSI slid 3.8 percent to its lowest close in nearly four months, and has lost 18 percent since May in volatile trade as investors fret over rising inflation.

"I think SJM will have lacklustre trading debut tomorrow, because of a poor stock market and investors worried about the litigation risk it faces in the future," said Adam Tam, a fund manager at Pacific Sun Investment Management.

SJM (0880.HK) delayed its trading debut from last week amid Winnie Ho's court challenge, and offered investors the option of getting their money back. Winnie Ho lost in last week's court ruling, but has filed an appeal. [ID:nHKG132458]

SJM said in its statement that retail investors in the offering had withdrawn orders for 55 percent of the shares sought by them. Retail investors had been offered 15 percent of the IPO. Employees eligible for IPO shares withdrew applications for about 3.2 percent of the shares earlier allotted to them.

The shares relinquished by investors were added to the institutional portion of the deal, SJM said in its statement.

To account for a shortfall of about 102.87 million shares, worth $40.6 million at the IPO price of HK$3.08, underwriter Deutsche Bank (DBKGn.DE) is subscribing for the shares and entered derivatives agreements with investors who will take on the economic benefits and exposure to the shares, the statement said.

For a related story, click on [ID:nHKG132458] (US$=HK$7.8) (Reporting by Tony Munroe and Kennix Chim; Editing by Anne Marie Roantree and Louise Heavens)