Tony Fung has begun cranking the financial wheels for his proposed Australian super-resort, saying he will offer the region’s investors a piece of the A$8 billion gaming and leisure complex through a partial listing on the Hong Kong Stock Exchange.
The financier told the Australian Financial Review he’s looking a year or more out for an IPO. He did not specify how much equity he’s prepared to share, but said he expects support will be strong. A debt offering may also be part of the package, he said.
Aquis at the Great Barrier Reef, his 7,500-room resort venture on the north Queensland coast, has state and local authorities excited about the promise of thousands of jobs and planned attractions for boosting foreign and domestic tourism that include a massive casino, multiple entertainment venues, a sports stadium, a golf course and a man-made lake and reef lagoon.
The Queensland government is offering three new licenses for resort casinos in hopes of rejuvenating a sagging economy by transforming the state into a preferred destination for big-spending Asian travelers and high rollers. The government has given preliminary approval to a multibillion-dollar mixed-use gaming and leisure complex in Gold Coast backed by Chinese money and has domestic casino rivals Crown Resorts and Echo Entertainment competing for a license in the capital of Brisbane in conjunction with Chinese investment partners.
The government also has given Aquis its preliminary nod, pending the outcome of an environmental review.
“As an experienced banker I’ve done many deals,” Mr Fung said. “It’s just common business sense and with the experience that I have had over the years to be able to identify an opportunity and analyse it to such an extent that [I feel comfortable] putting money, if you will, where my mouth is.”
Mr Fung’s father set up Hong Kong real estate and financial services firm Sun Hung Kai & Co in the 1970s and eventually sold a 33% stake in the group for HK$743 million. A savvy deal-maker in his own right, the 62-year-old tycoon is credited with developing the Hong Kong Convention and Exhibition Centre and has been a substantial investor and landholder in Queensland for more than a decade.
The key to listing Aquis, though, will be his ability to generate cash at the nearby Reef Casino Hotel in Cairns, he said. He intends to buy the Reef for A$270 million and has cleared a federal review of the purchase and is waiting now for clearance from regulators in Queensland and the Australian Capital Territory, where the Reef’s owners also operate a casino. He said he expects the property will be his by November. He is using family money to buy it, he said.
In the next two or three years, “If we can bring ourselves an EBITDA of $80 million … the chances of us getting [Aquis] financed without me giving up too much equity would be very high,” he told AFR.
The Reef’s controlling company, Reef Casino Trust, had earnings before interest, taxes, depreciation and amortization of A$14 million in the 2013 financial year, and its growth has been stymied by a lack of luxury facilities to compete for higher-end play. Mr Fung, however, said $20 million in EBITDA is possible this year, and to achieve it reports are that he will look to recruit junket operators to drive Chinese high-end play to its gaming tables. In support of this effort, he is also looking to buy the Pullman Cairns hotel for about A$60 million, according to local media. The 321-room hotel is being sold by Ascendas Hospitality Trust and hotelier Robert Magid.
Asian VIPs — particularly those from China — also figure prominently in Mr Fung’s plans for Aquis, which will attract 1 million visitors a year, he says, and employ 20,000 when its multi-phased development is complete.
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