Operator News

Australia – Chow Tai Fook buys into The Star Entertainment Group

By Phil - 29 March 2018

Australian casino operator the Star Entertainment Group is looking to increase its exposure to Asian high rollers with a $490m deal that will give a 4.99 per cent stake in the business to each of its two long-term Hong Kong-based partners.

The Star has expanded its strategic partnership with Chow Tai Fook Enterprises Limited (CTF) and Far East Consortium International Limited (FEC) to enhance the long-term value of The Star’s properties and core businesses.

The deal will establish a more focussed marketing partnership to fuel growth in Asian VIP programs through the Hong Kong-based companies’ ‘expertise, networks, customer bases and loyalty programs.’

The three companies are already linked to The Star Entertainment via partners in a new casino project at Queen’s Wharf in Brisbane.

Chow Tai Fook is a hotel, casino, transportation, jewelry, port and telecommunications businesses which has a strong foothold in the Macau casino junket business via a partnership with SunCity. It also operates Baha Mar in the Bahamas and is looking to develop a casino in Hoi An in Vietnam.

There will be an equity investment by CTF and FEC in The Star via a $490m placement to underpin the strategic partnership and further align the interests of CTF and FEC with the long-term growth and financial performance of The Star.
The Star said the expanded deal ‘de-risks The Star’s existing capital-light strategy of investing in its core business through joint venture developments with partners who have complementary skills and businesses.’

The Star Entertainment Group Chairman John O’Neill AO said: “The Board welcomes Chow Tai Fook and Far East Consortium as shareholders in The Star. Our expanded strategic partnership recognises the strength of our relationships built over the last four years and the shared vision of investing in properties with valuable long-term licences in sought after destinations.

“The complementary skills and businesses possessed by each partner have contributed over the past four years to creating long-term value for all shareholders, commencing with Queen’s Wharf Brisbane. More recently, The Star, Chow Tai Fook and Far East Consortium have jointly participated in the acquisition of the Sheraton Grand Mirage Gold Coast and plans to develop the first joint venture tower as part of The Star Gold Coast masterplan.

“This deal ensures a greater strategic and economic alignment of our collective interests, and continues The Star’s commitment to deliver growth investments through a capital efficient structure. In light of the group’s strong financial outlook, the Board has also increased the target dividend payout ratio to a minimum of 70 per cent of normalised net profit after tax, commencing from FY2018 final dividend.”

David Chiu, Chairman of FEC, said: “Strengthening the partnership with The Star and Chow Tai Fook further leverages our considerable complementary capabilities and helps to maximise the long-term value of The Star’s properties in Sydney and South-East Queensland.”

Patrick Tsang, Chief Executive Officer of Chow Tai Fook Enterprises Limited, said: “We welcome this further confirmation of the strength and strategic direction of our relationship with The Star and Far East Consortium. This investment in the relationship reflects our confidence in the creation of longterm value in destinations that have significant tourism appeal.”

In addition to existing agreements, The Star, Chow Tai Fook and Far East Consortium have entered into a Strategic Alliance Agreement, which provides a framework for the three parties to work together further to grow The Star’s properties and businesses, collaborate on potential mutually beneficial development opportunities and establish a marketing alliance.
The operational and financial arrangements of the expanded strategic partnership comprise a commitment by the parties to jointly pursue and participate in significant growth developments at or adjacent to The Star’s properties to increase their appeal as largescale, destinational integrated resorts to locals and visitors.

It will also establish a marketing alliance to drive incremental high-value tourism to The Star’s properties.