Star Entertainment Group has expanded its strategic partnership with Hong Kong-based Chow Tai Fook and Far East Consortium as the companies bet on growing Chinese tourism to Australia.
Under the accord, the Australian company will raise A$490 million (US$375.2 million) from the sale of shares. Both Chow Tai Fook and Far East Consortium will each receive 45.8 million new shares at $5.35 per share, and have their shareholdings capped at 19.9 percent. There will be no change to The Star’s board.
The strategic partnership will see both parties jointly pursue and participate in growth projects in, or adjacent to The Star’s current properties. It will also see the establishment of a marketing alliance to drive high value tourism to The Star’s properties.
“The board welcomes Chow Tai Fook and Far East Consortium as shareholders in The Star. Our expanded strategic partnership recognizes the strength of our relationships built over the last four years and the shared vision of investing in properties with valuable long-term licenses in sought after destinations,” Star Chairman John O’Neill said.
David Chiu, chairman of FEC said: “Strengthening the partnership with The Star and Chow Tai Fook further leverages our considerable complementary capabilities and helps to maximize the long-term value of The Star’s properties in Sydney and South-East Queensland.
The three companies are working together to redevelop a site at the Queen’s Wharf in Central Brisbane.
Expected to open in 2022, the $3 billion Queen’s Wharf Brisbane aims to transform the Central Business District and the river’s edge. The project is expected to employ 8,000 people once it’s fully operational.
The group is counting heavily on tourism arrivals from Asia to drive demand.
VIP gaming revenue at both Star Entertainment and rival Crown Resorts dropped sharply after China’s crackdown on corruption and the detention on the Chinese Mainland of Crown employees on gambling-related offences.
However, more recent figures have shown the VIPs are coming back and Star Entertainment is confident the new development and Queensland’s natural attractions will help draw in the crowds.
“It will be Australia’s best integrated resort, a world-class destination competitive with anything on offer in the Asia Pacific region, to attract domestic and international visitors who will contribute substantially to the Queensland economy,” O’Neill said at the ground-breaking ceremony in March.
“With our Hong Kong partners, Chow Tai Fook Enterprises and Far East Consortium, we are very confident in the tourism outlook for south-east Queensland,” he said.
“Together, we have projects and plans in Brisbane and on the Gold Coast which represent nearly a third of the total $14 billion of Queensland tourism infrastructure projects in the pipeline between now and 2022.”
The number of Chinese visitors to Australia is expected to jump three fold to 3.9 million by 2026. Queensland had more than half-a-million visitors from China last year, 3.8 per cent more than 2016, and direct flights from China have recently started to Brisbane, Cairns and the Gold Coast.
For the six months ending Dec. 31st, Star recorded a 15.9 percent gain in normalized revenue. Domestic revenue was up 5.7 percent, while its international VIP rebate business jumping 47.7 percent.
There are a further two casino licenses expected to be awarded in Queensland, one on the Gold Coast and on in Cairns. Politicians recently denied there were any plans to build a casino at a site on the Sunshine Coast.