Sibling Rivalries

One of the small pleasures one can enjoy in Asia is the ability to have a fine Cuban cigar, unavailable in the United States due to outdated Cold War politics.

While visiting a local tobacco shop around the corner from where we stayed at the Hotel Sintra (an elegant and reasonably-priced establishment, I might add), the proprietor was not extolling the virtues of Caribbean smokes, but rather, a particular brand of local cigarettes, simply because the cigarette company had some association with Stanley Ho.

The casino tycoon’s name strikes a level of reverence seldom seen in the world, and indeed, much of Macau’s gambling industry — or for that matter, Macau’s entire economic success — hinges on Ho’s Sociedade de Jogos de Macau (SJM). Ho gained his riches because for years, he had a monopoly granted to him by the Portuguese colonial rulers. Once Macau reverted to Chinese authority, the industry was opened to competition.

SJM is still a privately-held company, but Ho continues to try to take it public despite an ongoing battle with his younger sister Winnie Ho Yuen-ki. The largest casino operator in Macau, SJM runs 17 out of 28 casinos there, including the landmark Hotel Lisboa and casino.

The Lisboa is a well-known local landmark, and the unique building can be seen from just about anywhere on the peninsula. I had thought it looked rather like a giant pineapple, but learned recently that it was designed according to the principles of feng shui to look like a birdcage (to trap gamblers’ money inside).

The IPO, which would raise up to US$1 billion, would be used in part to redevelop the Lisboa. If the sibling rivalry is ever worked out and Ho is able to take his company public, it will be a rare opportunity for investors to buy a small piece of Macau’s thriving gaming industry.

However, the IPO has been held up by the Hong Kong Securities and Futures Commission, mainly due to the efforts and lawsuits from little sis, who claims big brother hasn’t been very brotherly in his dealings with her.

As rich as he is, the billion or so dollars he would raise from the IPO would give Macau’s gambling industry — and specifically, Stanley Ho’s share of that industry — a much-needed shot in the arm.

The industry is growing, and is already bigger than Las Vegas — but growing pains are already evident and big money is needed to flow in to finance not only Ho’s projects, but also other massive construction projects that are afoot, such as Studio City, and City of Dreams.

The outcome is still unknown, and it’s a possibility that Ho may not be able to go public after all — but that’s not likely to stop him. His empire will go on. The difference is, it is more likely that some of the financing will come from private equity and the debt market (in addition to Ho’s own back pocket) instead of the public market.