Industry sources suggest representatives from Texas-based TPG Capital, one of the world’s largest private equity firms, have been in Hong Kong for discussions with Dr Stanley Ho’s Macau casino operation company, Hong Kong-listed SJM Holdings Ltd.
TPG Capital is the joint owner, along with fellow PE firm Apollo Management, of the US casino operator Harrah’s. The two companies bought out Harrah’s in a 2006 deal reported at USD27.4 billion—a sum that included the operator’s debt burden.
TPG—formerly Texas Pacific Group—is known in the financial sector as a specialist in leveraged buyouts. It’s not clear at this stage what any talks with SJM would achieve. One option might be for TPG to offer to take a minority stake in SJM. Sources say it is unlikely TPG would be seeking majority control of SJM. That is because of the amount of capital likely to be required, even on a leveraged basis, for any majority buy out. Pre-credit crisis in 2008, Forbes estimated Dr Ho’s stake in SJM to be worth USD8 billion. Another reason is potential political hurdles.
Both the Macau government and the central government in Beijing are thought to favour the status quo in terms of the number of foreign owned operators in the Macau casino market.
Asian Gaming Intelligence approached a public relations company representing TPG Capital for a comment on the report of talks with SJM, but at the time of going to press, no comment was available.
RelatedPosts
