Thu, Jun 20, 10:31pm by Kevin Pitstock
Genting Bhd, the leading Malaysian casino company, increased its stake in Echo Entertainment Group on Tuesday. The move came only weeks after Crown Limited sold its ten percent interest in Echo shares. Opposed sides are beginning to align as the final stage of the Sydney Harbour casino decision nears.
Genting increased its stake from 5.2% to 6.6%, purchasing shares through its Hong Kong unit, Genting Hong Kong Ltd, for regulatory purposes. Echo and Crown are waging a contentious battle as their proposals for a second Sydney casino are set to be reviewed by officials from New South Wales within a matter of days.
Genting Group calls itself “Malaysia’s Leading Corporation”. The conglomerate includes four different financial entities, including Genting Malaysia Berhad, Genting Plantations Berhad, Genting Singapore Plc, and Hong Kong Limited.
The company was founded in 1965 by entrepreneur Tan Sri Lim Goh Tong. Over the decades, the conglomerate has grown to include interests in gaming, tourism, resorts, energy grids, crude oil, gas production, and plantations. With over 58,000 employees worldwide, revenues in excess of AU $5 billion per year, and assets in excess of AU $17,000,000, Genting Group can make a legitimate claim to be the top private economic entity in Malaysia.
Genting Group’s corporate headquarters is in Kuala Lumpur, Malaysia. The company’s current chairman and chief executive is Tan Sri Lim Goh Tong’s son, Tan Sri Lim Kok Thay, who has been a part of operations since 1976.
Genting’s purchase of Echo Entertainment Group stocks can be seen as a wager on Echo’s chances of winning the new Sydney casino bidding process against Crown Ltd. Echo currently owns the Star Sydney Casino and has a casino monopoly in New South Wales through 2019. Negotiations are ongoing as to whether that monopoly continues into 2020 and beyond, with the John Redmond-led corporation hoping to expand the Star Sydney with a $1 billion proposal.
Meanwhile, James Packer’s Crown Limited has put before NSW a $1.5 billion proposal to build a brand new casino complex in the Barangaroo development near the waterfront in Sydney Harbour. James Packer would call this new resort the Crown Sydney, after his company’s other gambling resorts in Australia, the Crown Melbourne and Crown Perth.
Both groups must submit bids before June 21st. Only one bid will be accepted. James Packer has tried to foster the idea that Crown’s victory is inevitable. Echo has submitted projections from London-based accounting giant PricewaterhouseCoopers which shows Packer’s proposal would cost New South Wales $14 million in revenues per year, due to cannibalisation of competition for high rollers, instead of adding $114 million in revenue.
Genting Group appears to believe the Echo Entertainment Group’s assertions carry weight. Of course, this move might be nothing more than a giant conglomerate making a calculated gamble, trying to get a larger share of the revenues from the wealthy Asian gambling clientele expected to visit a trendy new casino in Sydney. Crown Ltd did the same when Packer’s company bought 10% of Echo’s shares, as if he wanted to hedge bets on the outcome of the proposal process.
Still, Genting didn’t get where it’s at without taking smart risks, so the increase in stock signals confidence in Echo by a knowledgeable outside gaming giant.
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