Two scions of Malaysia's Genting gaming empire inked a deal on Tuesday to gain control of listed Australian wagering group Two Way Ltd as they seek to build their own casino and leisure business in southeast Asia.
Joey Lim Keong Yew and Ben Lim Keong Hoe, grandsons of Genting founder, the late Lim Goh Tong, and nephews of current CEO and chairman KT Lim, are behind a reverse takeover that will give the Australian company a 75 percent stake in an expanding casino and hotel complex in Vietnam.
Donaco Singapore, the company controlled by Joey Lim and Ben Lim, will acquire 95 percent of Two Way, to be renamed Donaco International Ltd.
Despite the close family link to Genting, Joey Lim said there were no financial ties between Genting and Donaco.
The deal comes as Genting, which owns several resorts and casinos across Asia under a number of subsidiaries, seeks to raise its stake in Australia's Echo Entertainment , which is also being targeted by Australian billionaire James Packer.
"They are two isolated events that just so happened to happen at the same time," Lim told Reuters in an interview. "We have both have our own individual objectives and targets and we will pursue them independently and objectively."
The listed group will initially focus on the expansion of the Lao Cai International casino and hotel complex in Vietnam, which represents all of Donaco's assets, but is also planning two similar projects and a casino cruise ship.
Two Way, which has a market capitalization of about $4.5 million, has been developing interactive television wagering applications which are being used in Australia.
Donaco had considered Singapore and Hong Kong to invest but believed markets there were saturated with offerings from places like gaming mecca Macau, Lim said.
"We felt we could bring a very compelling package to Australian investors in the form of a gaming play in one of the emerging markets with the highest growth in the world," he said.
The expansion of Lao Cai to a 428-room hotel with a casino housing 26 gaming tables and 150 slot machines, due for completion next year, is expected to provide a significant boost to revenue.
Lao Cai had revenues of $12.1 million and profit after tax of $6.3 million last year. Revenue was up 38 percent in the first six months of this year, the company said.
Mak Siew Wei, an executive director of Donaco who will join the Two Way board, said two similar casino-hotel projects in two other Asian countries were "far along" the planning stages, but declined to give more details due to the sensitivity of licensing negotiations.
"The expertise or the assets we would like to look at would usually be at border towns where you can tap both country's customers," he said.
The company has also identified a cruise ship it intends to buy for a planned route in China. Other possibilities include real estate investments and gaming opportunities online and in the TV market in China.
Lim said Donaco planned to tap capital markets for financing "in the near future", possibly the second or third quarter of next year.
Two Way shareholders will vote on the deal on November 22.
(Reporting by Jane Wardell; Editing by Richard Pullin)