Hong Kong firms team up in joint bid for Australian casino site
Chow Tai Fook and Far East Consortium team up with Australia's Echo to try to win project
Chow Tai Fook Enterprises and Far East Consortium have signed a deal with Australian casino operator Echo Entertainment to bid together for Brisbane's Queen's Wharf casino site.
The two Hong Kong-based companies signed a binding memorandum of understanding to each take a 25 per cent stake in the project while Echo takes the other half, the Brisbane-based casino operator said in a statement to the Australian stock exchange yesterday.
It reduces the number of competitors for the Queen's Street Wharf site, located in the heart of Australia's third-largest city, by one. The other companies in the running are Chinese property developer Greenland Holding Group and billionaire James Packer's Crown Resorts. The companies are expected to lodge fully developed proposals with the Queensland state government late this year. A decision on the successful bidder is expected by early 2015.
Echo operates several casinos around Australia including in Brisbane, on the Gold Coast, and Sydney's only casino the Star. However, the company is constrained in how it can develop the Treasury casino in Brisbane owing to the building's heritage listing status.
"Echo is delighted to work in partnership with two significant Asian-based partners and the government to develop and submit a proposal for the Queen's Street Wharf site, which will deliver major investment in tourism infrastructure including a world-class integrated resort to Brisbane," Echo chief executive Matt Bekeir said in a statement.
Another Hong Kong investor, Tony Fung Wing-cheung, is planning to develop a HK$58.6 billion casino resort in Cairns.
The three-way joint bid will leverage Chow Tai Fook's and Far East Consortium's expertise in hotels, property residences and know-how with the Asian market. A majority of gamblers at Australian casinos come from mainland China. The Darling hotel, part of Sydney's Star casino, said as many as 70 per cent of its guests are mainlanders.
CLSA gaming analyst Sacha Krien wrote in a note that it was a smart move for Echo on three fronts. Besides reducing competition and capital commitment, it would also bring in expertise.
"This move is not unexpected with Echo reportedly in talks with this bidder and also the other Chinese bidder Greenland. We would expect Crown to either team up with Greenland or another developer. We believe Echo is best placed to win the project as the incumbent," the report said.
Chow Tai Fook Enterprises is controlled by tycoon Cheng Yu-tung, whose family owns a large portfolio of property, hospitality and retail interests across the region, including New World Hotels, New World Development and Chow Tai Fook Jewellery, the world's largest jeweller.