Genting Malaysia may consider joint venture to enter Macau market, analysts say

Analysts at JP Morgan think GMM could opt to invest via equity or a joint venture if the pricing is right.

Macau.- Some analysts expect that GMM Limited won’t right off an attempt to enter Macau’s casino market just yet. As the only outsider in the contest, the company linked to Genting Malaysia failed in its bid to win a licence in Macau’s casino licence retender. However analysts think it may now seek a potential joint venture.

Analyst DS Kim at JP Morgan said GMM may resort to an equity or joint venture investment if prices are right and it can obtain approval from the government. In September, Sanford C. Bernstein said that Genting could be seeking to position itself as a potential rescuer “in the event that a concession holder experiences financial difficulties” and requires a partner or potential buyer”. It signalled SJM as a potential candidate.

During a press conference on Saturday (November 26), Andre Cheong Weng Chun, chairman of the tender committee and Secretary of Administration and Justice, said the decision to award Macau’s six casino licences to its current gaming operators followed five rounds of negotiations with the seven bidders.

Consulted by Macau Business, gaming analysts said the government’s decision to award new gaming concessions to six incumbent operators underscored the priority of job stability and the focus on avoiding disruption of the status quo.

Ben Lee, managing director of IGamiX Management & Consulting, noted that the Macau government had decided not to do major disruption, adding that the decision to retain existing operators showed the Macau government’s priority was to maintain gaming employment.

Carlos Lobo, an attorney and former legal adviser to the Macau Gaming Commission, said: “There wasn’t enough time left to switch operators. A different solution could jeopardize employment of thousands and consequently risk social stability”.

Alidad Tash, managing director of the consultancy 2NT8, said the Macau government has used GMM’s outside bid to its advantage, saying: “The Macau government masterfully exploited the threat of Genting taking over an existing concession, and forced the current six companies to commit to US$12.5bn in non-gaming spend in the next ten years. Without the Genting ‘scarecrow’ I doubt if the operators would’ve committed half as much.”