MPHB seeks 100% ownership in Magnum

After much speculation on the reason of suspension since yesterday 2.30pm, Multi-Purpose Holdings Bhd (MPHB) finally unveil its answer. An memorandum of understanding (MOU) was signed with two parties (as elaborate further below) seeking to take over its associate Magnum Holdings Bhd. This would cost MPHB around RM1.65 billion to complete the exercise.

MOU with CVC Capital Partners Asia Pacific group

• To acquire the remaining 49% stake in Magnum
• To acquire RM674.65 mil nominal value RCULS-C
• Total costing RM1.627 billion
• Acquisitions via 343.82 mil new MPHB shares at RM2.30 each and RM 809.20 mil cash

MOU with Management of Magnum

• To acquire 2 mil magnum shares or 2% equity interest
• To acquire RM4.86 mil nominal value of RCULS-C together with all accrued interest remaining unpaid
• Total purchase costing RM37.20 mil
• Acquisitions via 16.17 mil new MPHB shares at RM2.30 each

What is the rationale behind?

MPHB said the proposed acquisition will enable MPHB to have 100% ownership in Magnum, thus making gaming as the core business of the group. "It would further improve and strengthen the future profitability and cash flow position of the MPHB group via the higher share of Magnum's earnings and cash flows," it said. The stock was last traded at RM2.68 before suspension.

Bloomberg: Past 6 months share price of MPHB

However, Finance Malaysia reckon that the said corporate exercise was to facilitate the exit of CVC Capital, in order to path the way for the re-listing of Magnum on Bursa Malaysia, 3 years after it was privatized. At RM2.30 per new share to be issue, it was deemed fair for CVC Capital to cash out. Reportedly, MPHB believes that the re-listing of Magnum could fetch a high valuations, given the only listed number forecast operator (NFO) was BJTOTO currently. Another NFO under the umbrella of Tanjong (Da Ma Cai), was privatized last year.

No CNY Reunion Dinner for Stanley Ho?

Just one week left before the Rabbit Year CNY, local and international press are publishing the high-profile Stanley Ho's family feud. While we're busily shopping during this festive season, many people are chasing the "family drama", just like another popular Hong-Kong based production. Maybe, TVB's directors should consider converting the reality into a story-line drama/movie. I'm sure this could be a blockbuster-liked production.

Hong Kong and Macau tycoon Stanley Ho

SJM Holdings' most popular casino, Grand Lisboa

Obviously, fighting for money is very common nowadays especially for those wealthy families. To spice it up, the bigger the family was, the conflicts gets even greater.

Reportedly, Stanley Ho who has 4 branches of family and 17 children sure will intensified the degree of fighting.

Source: Wikipedia

Who is Stanley Ho?

• Stanley Ho, also known as Ho Hung-sun, is an entrepreneur in Hong Kong and Macau. 
• Nickname "King of Gambling", he get the government-granted Macau's gambling monopoly 40 years ago.
• Hong Kong's 13th richest person with a net worth of USD 3.1 billion in 2010.
• Businesses includes entertainment, tourism, shipping, real estate, banking and air transport.

Stanley Ho's prized asset, SJM Holdings Limited...

• One of the casino operators in Macau.
• Market Capitalization : HK$ 73.63 billion

Source: SJM Holdings Limited

Source: Bloomberg

Depending on the outcome of the wealth distribution saga, Stanley Ho's CNY celebration will be well-received by the most happily inherited family. I doubt the saga will end just before CNY for Stanley to enjoy his old-age celebration with at least one of his four families.

Good luck, Stanley.

Source: Bloomberg, SJM Holdings Limited, WSJ, Wikipedia

New Fund: OSK-UOB Capital Protected Asia Gaming & Hospitality Fund

With the Asian economies leading in the run up to the global economic recovery, it is expected that the gaming and hospitality sector in Asia would be positioned for growth. Supported by a stead fast growing population and rising income, the gaming and hospitality sector in Asia is thus expected to flourish.

On such expectation OSK-UOB offer investor a new fund that will seek to capitalize on the expected growth of this sector in the Asian region, particularly in Macau and Singapore whilst protecting* investors' capital.

This is a 4-year close-ended capital protected* fund which aim to provide regular income over the medium term whilst protecting investors' capital* on the maturity date.

This fund is suitable for investors who:

1. have a low risk tolerance;
2. seek capital protection*;
3. share our view on the growth potential of the Asian gaming and hospitality sector during the run up to the world economic recovery;
4. have a medium term horizon (4-year);
5. seek regular income

Offer Period     : 5 Oct - 18 Nov 2010
Min Investment : Rm 1,000
Sales Charge    : 2.50%

* This capital protected fund is provided through investments in ZNIDs and not by a guarantee.

Sports Betting: Kaki Bola to Kaki Judi?

Recently, market talk has increased on the possibility of an approval of a sports betting license in Malaysia. What? Malaysia? YES…

Introduction to Sports Betting…

For “kaki bola”, sports betting definitely not a strange activity for them – I am not saying that every ‘kaki bola’ also bets. As long as there was demand, almost any kind of sports in the world can become a common interest for betting. Example, tennis, baseball, badminton, golf, F1 racing, and even sepak takraw… Of course, we can not left out world’s most popular sports – football. According to some estimates, the illegal gaming syndicate market size is about RM10 billion, similar to the current 4D market size, of which the majority is from sports betting.

  

Further liberalization of gaming industry?

In Malaysia, 4D is the only legal betting activity that existed, besides going up to Genting Highlands. On the whole, further liberalization are positive, given that this would help enlarge the government revenue pie by taking market share from the illegal.

As soon as before World cup 2010?

I do not think that it can be implemented so fast because this must be brought-up to Cabinet for approval (a very complicated place now).

Sports betting a new opportunity for betting company?

Not necessarily. It all depends on how it is being implemented. The main issues were:

1. the extent of restriction being imposed by government
2. high prize payout ratios involved 
3. gaming taxes to be borne
4. agent commissions to be paid
5. sports betting is much more complicated than normal 4D betting

The prize payout ratios for sports betting are very high, at 90-95%. Depending on the type of sports betting allowed, the prize ratio would vary. Example, a win/lose/draw system, as practiced in Singapore, got a lower prize payout ratio than betting on an odds system.

  

I believe that government would not allow an online betting system, as this would involve a whole set of other risks and control issues, like currency exchange. As such, the license would likely be for betting via the existing 4D outlets with a win/lose/draw system. This is because an odds betting system, with live features, must go through the un-control-able online mode, which is not encouraging.

  

However, win/lose/draw betting is NOT so popular to punters, given the more exciting nature of the odds system of betting available in the illegal market. Convenient wise, this would lose out, as punters had to place a bet physically at 4D outlets, as compare with a phone call in illegal market.