Billionaire Cheng Yu-tung's International Entertainment Corp said it would be buying a 70% stake in Sun City Gaming Promotion Co for a price tag of up to HK$7.35 billion or $948 million, Bloomberg reported. Cheng Yu-tung is the fourth richest man in Asia. The report said the acquisition of the Macau gambling junket operator was a bet on the casino boom happening in the city. A statement about the acquisition was submitted by International Entertainment to the Hong Kong Stock Exchange yesterday, the report said.
Revenue generated from casinos in Macau, the only place in China where the law permits casino operations, increased 18.6% to $45.2 billion in 2013. An estimated two-thirds of the revenue was generated from high-stake bettors who come from the mainland. Junket operators like International Entertainment arrange the trips of these bettors.
In a phone interview, Union Gaming Group Analyst Grant Govertsen told Bloomberg, "Buying into an existing junket operator is probably the easiest way to participate in Macau's casino boom. Macau's government is unlikely to give out more casino licenses but the city's tremendous growth in casino business is largely driven by the mainland VIPs brought by the junkets."
Cheng has a 10% stake in Sociedade de Turismo & Diversoes de Macau Sa, a closely-held firm founded by his friend Stanley Ho. The stake was purchased by Cheng in 1982 from the former business partner of Ho. The stake affords him control of 293 million shares of Asia's biggest casino operator in terms of revenue, SJM Holdings Ltd.
International Entertainment said the purchase will allow the firm to increase its range of investments. The company may have to gather funds through the placement of shares or convertible securities in order to fund the acquisition.
Sun City gets its net profits from operations that promote gambling, like arranging transportation, accommodation as well as giving credit facilities to high rollers, the report said.
Join the Conversation