As John Story packed his desk at Echo Entertainment group, a casualty of James Packer’s campaign for control, Genting Group quietly bought a small strategic stake in the ailing casino operator.
It picked its timing well. It took a few hours for everyone to digest Story’s exit, but one commentator at the time, Stephen Mayne, said the Genting buy-in was of greater significance to Echo’s future.
James Packer seems to agree. Two weeks ago, he travelled to Macau to meet with KT Lim, the head of Asian casino conglomerate Genting Group. He told The Australian before his meeting: “I think KT Lim has done an amazing job building his company.” An unnamed company source elaborated, saying there was an “80% chance Mr Lim is friend, not foe”.
Under the New South Wales gambling laws, no single shareholder can own more than 10% of a gambling company. This means Packer, through Crown, which he chairs, and Lim, through Genting, cannot control more than 10% of Echo each. But should Packer succeed in convincing the authorities in New South Wales to let single shareholders up their stake to 20%, the two companies could control nearly half of Echo between them. Genting’s stake is currently 9.883%. After the initial buy-in, it’s been quietly but steadily increasing its stake, securing another 2.8% of Echo on Monday. And today, reports reveal it has appointed CIMB, Malaysia’s biggest investment bank, to advise it on its bid, and public relations firm FTI Consulting to ease its entry into Australia.
So are Packer and Lim friends, or rivals? It’s difficult to know what to make of their meeting. It points to the two moguls working together, or at least talking, but should Genting make a bid for outright control, it could spark a bidding war for Echo. Genting’s appointment of CIMB and FTI Consulting suggests this is a possibility.
So, who is KT Lim, the man complicating all of Packer’s best-laid plans?
KT Lim is short for Lim Kok Thay. Like Packer, Lim is a savvy businessman whose powerful father, Lim Goh Tong, gave him a leg-up.
The elder-Lim’s rags-to-riches story is one often told in Malaysia. He left Fujian province in China for Malaysia in his youth, and made a fortune in construction. While trying to raise money for a resort in the hill country outside Kuala Lumpur, Lim Goh Tong (G.T. Lim, to use the conventional Westernisation) persuaded the then-Prime Minister to grant him a casino licence, Malaysia’s first, as they dined at the proposed resort. The Prime Minister, against all expectations, agreed, and well, the rest is history.
KT Lim, who was 17 when is father clinched his first casino license, is the only one of his father’s children today involved in the business. A graduate of Harvard Business School and the University of London (where he studied engineering) the second son of GT Lim joined the company as a director in 1976. When his father retired in 2000, KT Lim became the CEO and chairman of Genting Berhad, the holding company which controls Genting Group, the sprawling Malaysian conglomerate which operates large casinos in Singapore, Malaysia, Hong Kong, the United Kingdom and United States, Egypt, South Africa and Lebanon.
Genting was forced to expand outside its country-of-origin because building more casinos in Muslim-majority Malaysia isn’t likely to fly with the regulators there. It operates the only gaming resort in the country.
Despite a handful of setbacks, notably in the United States, its expansion plans have been broadly successful, swelling its coffers, and those of Lim. It’s become the largest operator of casinos in the United Kingdom.
In 2009, Forbes valued Lim at $225 million. This year, he’s tripled his personal net worth to $605 million (if that seems a little on the low-side for a casino king-pin, his family’s net worth is reportedly $US6 billion). As the head of Genting, 60-year-old Lim is easily the most influential person in Asian gaming, and he has plans to see Genting become one of the world’s leading multinational corporations. Apart from gambling, it also has interests in property development, power and plantations.
Hence the interest in Echo. Genting has $AU5.4 billion in cash, and it’s looking to pick up some bargains. And there’s plenty more where that came from – Genting’s net operating cashflow was $AUS2.1 billion last year. It won’t be investing the baulk of this in Australia by any means. As the global economy worsens, Genting is one of the few winners, convincing governments around the world of its ability to create employment and new revenue streams in the highly-taxed gaming industry. It’s got plenty more projects currently going on in the United Kingdom, the Philippines, Vietnam and the United States, and stands posed to gain from the liberalising of gambling sectors in South-East Asia. Several countries are expected to do so later this year, as they try to emulate Singapore’s boost in international tourism from 2006 when it awarded licences for two casinos.
The man driving all this is Lim, a married father of three who sells his casinos as “family entertainment venues”. Though he professes to a love of hawker food, he has some fine tastes. His home in Singapore has a $1 million original Rodin sculpture which greets guests the moment they enter. Original artworks by Picasso, Botero and Monet hang on his walls.
In recent years Lim has been giving far more interviews as part of his company’s vast expansion plans. This is fortunate, because like Packer, he’s good for quotes.
“Life is full of gambles but I’m not a hard-core gambler,” he quipped to a reporter at Singapore’s Business Times in 2006, before adding that he only takes “calculated risks” in business. When he opened Genting’s casino in Singapore, the first in the country, he was the first to gamble in it, the cameras capturing his game of baccarat.
Genting sometimes engages in practices that can’t help but draw the media’s more critical attention, especially outside of Asia. Like many a casino operator (Packer included), Genting likes lobbyists. It used an army of former staffers of high-ranking politicians to help smooth the way in America. Genting boosted their efforts with $623,320 in donations to both major US political parties , according to the New York Times.
Gambling halls are banned in New York, but Lim wouldn’t let that stop him. The Times also reported earlier this month that Genting spent more than $US2 million lobbying New York governor Andrew Cuomo to build a new convention centre and casino complex in Queens. Unfortunately for Lim, negotiations for that particular project didn’t work out.
Asian sharemarkets haven’t welcomed Genting’s move on Echo, with its shares falling 4% in Singapore when it announced its first take, and a further 0.7% on Tuesday as it increased its holdings. Australia isn’t seen as a glittering star of the gambling world. But by choosing an Australian casino operator in which to invest some of Genting’s riches, Lim might be trying to change that.
But then again, maybe Echo is just a stop on the way to Macau. It was, after all, where the two casino operators chose for their meeting earlier this month. Some have speculated on a possible trade-off between the two moguls, one that could see Genting aid Packer in Echo, in return for an entry into Macau. Crown, through its one-third holding in Melco Crown Entertainment, holds one of six sought-after casino licences in China’s capital of gambling.
It will be fascinating to watch this situation develop and only one thing seems certain – we are going to be hearing a lot more about KT Lim.