Genting increases stake in London Clubs to expand

23 December 2004

As reported by: Bloomberg News

Genting's increased stake in a UK company will help Asia's largest publicly traded casino operator diversify amid rising competition in the region, investors and analysts said.

Kuala Lumpur-based Genting raised its stake in London Clubs International twice in the past week. It increased its holding in the British owner of 11 casinos to 19.1 percent on Monday after lifting it to 16.2 percent last Friday, according to a Regulatory News Service statement yesterday.

“It's a necessary move,” said Chong Sui San, who helps manage the equivalent of $395 million at Allianz General Insurance Malaysia in Kuala Lumpur. “Whatever opening there is outside Malaysia, I think they will just grab it.”

For Genting, whose mountaintop resort near the Malaysian capital attracts gamblers from all over Asia, increased rivalry from US operators in Macau and a possible casino in neighboring Singapore may siphon away visitors.

Las Vegas Sands, which last week debuted on the New York Stock Exchange with a 61 percent surge, had opened the Sands Macau casino in the Chinese territory this year. The company is also interested in Singapore's plan to allow a casino as it vies with other Asian countries for tourists and conventions.

More than 20 percent of hotel guests at the Genting resort are from Singapore, according to Resorts World, Genting's casino and hotel unit.

“The reality is that in Malaysia there's only so much room for growth,” said Wong Shou Ning, who helps manage the equivalent of $132 million, including Genting shares, at Kenanga Asset Management in Kuala Lumpur. “If Genting wants to keep in line with the competition, it also has to be brave enough to cross geographical borders.”