KUALA LUMPUR — The MCA is said to have joined the bidding for Tanjong Plc’s gaming business that is valued at about RM2.5 billion, which is also being eyed by the Cheng family with Filipino tycoon Roberto ‘Bobby’ Ongpin Jr and some international private equity firms.
The move came just as MCA’s Huaren Holdings Sdn Bhd sold its 42.4 per cent stake in The Star publisher Star Publications (M) Bhd for RM1.28bil, or RM4.09 a share, to the party last Thursday, giving the investment firm the funds to buy the gaming company in a combination of cash and debt financing.
The Malaysian Insider understands that MCA has been advised to bid for the gaming unit as it offers recurring revenue, similar to The Star daily.
“The MCA is in the fray for Tanjong,” a source told The Malaysian Insider.
It is also learnt that Tanjong’s controlling shareholder, tycoon T. Ananda Krishnan, could decide as early as today whether to make the sale. The expected sale is part of a restructuring to be syariah-compliant and tap the Middle East and North African markets together with those in South and South-East Asia to expand the power-generation business.
A key player in any deal is Ongpin, a Marcos-era trade minister, who has built a sizeable property, telecommunications and online gaming ventures in the Philippines.
It is understood that the magnate could be a partner for the bid by either the
MCA unit or the Cheng family, which is involved in the gaming slot machine business, mostly in the Klang Valley.
The family is led by patriach Datuk David Cheng, whose son, Datuk Douglas Cheng, had teamed up with Datuk Vincent Tan Ting Wong and Henry Yip to establish the popular Chinese restaurant chain Dragon-I in 2004.
“There is a tiny gap in the valuation between what is offered and asked,” the source added.
The Malaysian Insider understands that the variance is just about RM100 million.
Tanjong’s gaming business would include the numbers forecast operator (NFO), Big Sweep and Racing Totalisator (RTO).
The National Stud Farm which makes a small profit, would also be bundled into the lot, reports said recently.
Tanjong’s gaming arm, Pan Malaysian Pools Sdn Bhd, reportedly has about 24 per cent share of the local market. Tycoon Tan Sri Vincent Tan’s Berjaya Sports Toto Bhd’s market share is about 40 per cent while Magnum Corp Bhd’s is 36 per cent.
While the NFO business is the cash cow in the gaming business stable, Tanjong has been losing money from its racing operations.
According to reports, the losses from the RTO business could reach up to RM80mil in the current financial year.
The losses arise from a number of causes. It is said that the Selangor Turf Club is profitable but not those in Penang and Perak. Furthermore, the RTO business is hamstrung by annual cash payments to each of the three turf clubs.
Industry observers said the business, which has been modernised with the introduction of telephone betting, was lagging behind the illegal business which could source bets from punters through the Internet.
This has proved to be a lucrative avenue for illegal bookies who are said to make around four times what the turf clubs can pull in on any racing day.
It is learnt that the new owners of Tanjong will offer new gaming products to ensure better returns apart from asking for a reduction of government taxes.
Foreign bidders will probably not be penalised in the bidding process if they pair up with a local partner with knowledge of the industry. Multi-Purpose Holdings Bhd in a partnership with CVC Asia Pacific Ltd completed the privatisation of Magnum in 2008.