Category Archives: Business

Billionaire Razon’s $1.2 Billion Casino Gets Lead

The Philippines tomorrow opens the first casino in the hub that is its answer to Macau, and billionaire Enrique Razon will have the gamblers to himself for now.

The port magnate’s $1.2 billion Solaire Manila casino will have a monopoly within the capital city’s new entertainment and gambling complex until the country’s richest man, Henry Sy, opens a venture there in 2014.

 The billionaires are investing in casinos as the Southeast Asian nation seeks to emulate the success of Macau, where gamblers from China’s mainland fueled a 14 percent revenue surge to a record $38 billion last year. New resorts could help the nation’s gaming market expand five fold to $10 billion by 2017, its chief regulator estimates.

“Razon’s venture is closely watched because it can prove if the Philippines can get a bigger share of junket and VIP market in Asia,” said Allan Yu, who helps manage about $11 billion at Metropolitan Bank & Trust Co. “It’s very promising and it looks like it’s going to take-off.”

Junkets provide credit and help draw mainland Chinese gamblers to casinos overseas. VIP bettors are the biggest revenue generators in the world’s largest gambling hub of Macau, where companies from Sands China Ltd (1928). to Wynn Macau Ltd (1128). do business.

The gaming area in Solaire is decorated with mother-of- pearl-covered columns and a floor embedded with colored glass. It is designed to get 45 percent of its revenue from VIPs, or high-stake bettors, according to Razon partner Bradley Stone, president at Global Gaming Asset Management.

Stock Surge

Razon, who controls 80 percent of Bloomberry, holds one of four casino licenses the Philippines awarded in 2008 and 2009 for the 110-hectare entertainment hub that is close to Manila Bay.

Sy and Melco Crown Entertainment Ltd. (6883), are scheduled to jointly open a casino resort there in July 2014.

A venture of Japanese billionaire Kazuo Okada and a fourth casino in the Manila complex by Philippine billionaire Andrew Tan and Genting Hong Kong Ltd (GENHK). are expected to open between 2015 and 2016.

Razon faces existing competition outside the new hub, including from a gaming complex Genting and Tan opened in 2009 in front of a terminal at the capital’s international airport. The Philippine Amusement and Gaming Corp., the state regulator and casino operator, also has four casinos in the capital.

Razon’s casino-hotel company Bloomberry Resorts Corp. (BLOOM), which has invested in Solaire, dropped 5 percent today to close at 14 pesos in Manila trading. It has rallied about 40 percent in the past six months on hopes the new casino will profit from high rollers.

High Rollers

Razon holds 977.7 million shares of International Container Terminal Services Inc (ICT)., a 50 percent stake, worth about $2.1 billion, according to data compiled by Bloomberg

Bloomberg Billionaires IndexBloomberg Billionaires Index

Solaire’s casino operations will be run by Global Gaming, whose principals aside from Stone include William Weidner, former president at Las Vegas Sands Corp (LVS), and Garry Saunders, former chief operating officer at Melco Crown (6883). Global Gaming has a 9 percent stake in Bloomberry Resorts.

Razon has so far spent $750 million to build Solaire’s first phase that opens this weekend and he’s spending another $400 million for an expansion that will be completed by the third quarter of 2014, Stone said. The Philippines gambling market can offer a 30 percent return on investments, he said.

Manila is three to four hours away from China, Japan and South Korea and will be an attractive alternative for high rollers in these markets, Stone said.

Premium Players

The Philippines is counting on the new casino ventures to boost tourist traffic that lags regional neighbors including Indonesia and Thailand. It’s also betting these investments, set by government at $1 billion for each license holder, will help cut the jobless rate, which is among the highest in Asia.

Solaire’s first phase includes an 18,500 square meter gaming area with 300 tables and 1,200 slot machines, seven restaurants and a five-star hotel. The expansion, already under construction, includes more VIP gaming space, a 1,800 seat theater for Broadway shows and 60,000 square meters of upscale retail space. It will also feature 300 suite rooms and more restaurants.

“This will really be the first time that the Philippines is going after the premium player and Mr. Razon understands this,” Stone said. “Manila has the opportunity to be competitive and to get its share of that business.”

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Philippines upgraded by Fitch to investment grade

The Philippines has been given an investment grade from a credit ratings agency for the first time, a move expected to boost investment.

Fitch Ratings said it had raised the nation’s long-term foreign currency debt rating to BBB- from BB+.

The Philippines has become one of the fastest growing economies in the region.

Analysts said it was a vote of confidence and would improve investors’ perception of the country.

“The investment grade rating substantiates all the progress Philippines has made in terms of fiscal sustainability, reforms, and improved growth outlook,” said Prakriti Sofat from Barclays Capital in Singapore.

“This will generally have a positive impact on sentiment towards the Philippines’ currency and across markets.”

Many analysts had been expecting a ratings upgrade for the country and said other agencies could follow suit in the coming months.

The official investment grade reduces borrowing costs and widens the pool of potential investors.

Some investment funds enforce restrictions on debt that is below investment grade, while some require two out of the three top ratings agencies to have given the country an investment grade.

The economy of the Philippines grew at a rate of 6.6% in 2012, beating government targets of 5%-6% growth.

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