James Packer-Backed Investment Manager Increases Stake in Casino Operator The Star

Sydney-based investment manager Ellerston Capital has bought additional shares in Australian casino operator The Star Entertainment Group, local news outlet The Australian reported earlier today.

Ellerston Capital is known to be backed by businessman James Packer, the owner of The Star’s rival casino company Crown Resorts.

The Star revealed in a filing to the Australian Securities Exchange that Ellerston Capital has increased its stake to 5.07%. The investment management firm first bought into the casino operator back in March. It later on explained that it was interested in The Star because it believed the company would leverage the growing inbound tourism from China and Southeast Asia in the best possible way.

Australia’s VIP casino business was hit severely in the weeks and months after 19 Crown Resorts staff members were detained and subsequently sentenced in Mainland China for aggressive promotion of casino gambling. Although The Star had no involvement in the case, it also suffered the consequences of the arrests, as Chinese high-roller players withdrew from the Australian market.

According to Ellerston Capital, The Star will grow further in future due to its growth strategy and capital investment program.

Mr. Packer currently holds a 25% stake in Ellerston Capital through his private investment firm Consolidated Press Holdings. However, he is a passive investor in the Sydney-based investment management company, which means that he has no involvement in the way it approaches rival gambling operator The Star.

News about Ellerston Capital’s growing interest in the casino operator came days after it became known Malaysia’s Genting Group had sold its 5.62% stake in it for the amount of A$233 million. Genting took interest in The Star, then Echo Entertainment, back in 2012.

The Malaysian operator reportedly wanted to acquire a 25% stake in its Australian counterpart. However, it needed the green light from local regulators in order to be able to do so, a process that took too long and apparently urged Genting into changing its mind.

The Malaysian company’s exit from the Australian market spurred reports about a potential The Star-Crown Resorts tie-up. The reports were denied later on Friday, although analysts expressed opinion that a merger between Australia’s largest casino operators could be a move that both companies would reap benefits from.

According to Rohan Sundram, an analyst from financial services firm Citi, a tie-up could bring A$110 million in annual cost synergies. He further noted that a combined entity would take a 86% share in Australia’s domestic mass market and a 90% in its VIP market.

Related News

CasinoNewsDaily is a media focused on providing daily news from the casino industry as well as in-depth gaming guides. Our guides cover roulette, blackjack, slots and video poker.
Tweet about this on TwitterShare on FacebookShare on Google+Share on LinkedInShare on Reddit