* Carlyle, Providence among parties approached -sources
* PE funds previously invested in gaming assets in Southeast Asia (Adds details about Tan, Malaysia M&A market)
By Stephen Aldred and Min Hun Fong
HONG KONG/KUALA LUMPUR, April 12 (Reuters) - Malaysian tycoon Vincent Tan is considering selling a 49 percent stake in the unlisted gaming unit of Berjaya Sports Toto Bhd for about $1 billion including debt, and has hired Citigroup Inc as adviser, sources with direct knowledge of the matter said.
The potential sale is expected to generate interest from private equity firms, who have shown an appetite for gaming assets in Southeast Asia in the past.
Carlyle Group and Providence Equity Partners were among those recently approached to buy the stake, according to sources familiar with the matter. It is unclear whether the buyout funds have proceeded with the bidding.
The sources declined to be named because the discussions were private. Berjaya Sports Toto, Carlyle, Citigroup and Providence declined to comment.
Vincent Tan's estimated personal wealth of $1.2 billion puts him on Forbes' 2010 billionaire's list.
His Berjaya Group is involved in lucrative retail operations such as Sports Toto and the McDonalds and 7-Eleven franchises in Malaysia.
He also owns local daily The Sun and Berjaya Times Square, a mall located in the heart of Kuala Lumpur. Last year, the group missed out on the award of a profitable sports betting license.
Malaysia's M&A market had a quiet start to the year, with deals worth $1.5 billion announced in the first quarter, compared with $3.9 billion a year ago, according to Thomson Reuters data.
However, M&A activity could pick up especially in the banking sector after the government hinted at allowing foreign banks to buy up to 49 percent stake in domestic lenders. [ID:nL3E7E32N8]
GAMING ASSETS
Gaming assets in Malaysia must be majority Malaysian-owned, which is why Tan is limited to selling 49 percent. Tan is exploring the sale of a unit called Sports Toto Malaysia, which houses the Malaysian gaming assets. That business has 680 outlets offering numbers games and generated 3.6 billion ringgit ($1.2 billion) in 2009, according to Berjaya's website.
The parent company, Berjaya Sports, has a market value of $1.9 billion.
If a deal goes through, a successful buyer may have to inject about $400 million in equity, which is a sizeable equity funding for any Southeast Asian deal.
Strong local bank liquidity was available to back the deal, with MayBank leading a consortium to offer about $600 million in loans to potential bidders, sources familiar with the matter said.
Malaysia's gaming sector has seen successful private equity investments in the past. CVC Asia Pacific acquired 49 percent of Magnum Corp in 2008, and is currently reducing that stake by about half, selling to Multi-Purpose Holdings Bhd.
Intense competition for deals in hot markets such as China and India means global buyout shops including CVC, Carlyle TPG and Blackstone are increasingly pushing into fast-growing markets such as Indonesia, Malaysia, the Philippines and Vietnam, as they hunt for investments.
Bankers say there are more private equity deals in the making in Southeast Asia.
Indonesia's consumer-focused Tudung Group has attracted interest from buyout funds in its efforts to sell a 30 percent stake in food and beverage firm GarudaFood in a deal worth about $300 million, sources have previously told Reuters.
Carlyle and Affinity Equity Partners are in the race to buy unlisted Malaysian glovemaker YTY group, in a deal valued at about $330 million, a source with direct knowledge of the matter previously said. [ID:nLDE72913Q] ($1 = 3.02 Malaysian Ringgits) (Editing by Ken Wills and Anshuman Daga)