Billionaire Razon Jumps to Casinos from Containers

Nov. 8 (Bloomberg) -- Shipping magnate Enrique Razon is gambling that he can turn the Philippines into one of Asia's casino resort destinations. Razon, chairman of International Container Terminal Services, opened Solaire Resort & Casino in March, the first of four gaming resorts set to rise along Manila Bay. This report is featured in the December issue of Bloomberg Markets magazine. Bloomberg's Emmitt Henry reports. (Source: Bloomberg)

Enrique Razon doesn’t gamble and says he feels more comfortable operating a port crane than he does glad-handing in a crowd of high-rollers.

“I am just not the person that likes being around plenty of people,” Razon says. “So you wonder why I’m in the casino business, right?”

Razon joined the gaming fraternity in March, when he opened the Solaire Resort & Casino on a plot of reclaimed land along Manila Bay, Bloomberg Markets magazine will report in its December Billionaires Issue. The glittering Solaire is the first of four resorts slated to occupy a Las Vegas-style complex called Entertainment City along a 120-hectare (300-acre) strip in Bay City.

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Known to friends as Ricky, Razon, 53, moved into gambling after making a fortune with his Manila-based ports business. International Container Terminal Services Inc., or ICTSI, moves containers on and off ships in 19 countries. Razon’s 71 percent stake in Bloomberry Resorts Corp., the publicly listed casino-hotel company that owns Solaire, accounted for about a third of Razon’s estimated $5.2 billion net worth as of Nov. 6, according to the Bloomberg Billionaires Index.

Host of Challenges

Razon faces a host of challenges in making his casino venture work. The Philippines, with its traffic jams and dilapidated infrastructure, has to compete with established resorts in Macau and Singapore that attract hundreds of thousands of Asian gamblers. And soon after Solaire opened, Razon got into a dispute with his resort service operator, Las Vegas-based Global Gaming Asset Management, and Bloomberry canceled its contract.

Photographer: Paul Stuart/Bloomberg Markets

Enrique Razon, who has made billions running container ports around the world, is now proprietor of Manila's first major gambling venue, the Solaire Resort and Casino. Close

Enrique Razon, who has made billions running container ports around the world, is now... Read More

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Photographer: Paul Stuart/Bloomberg Markets

Enrique Razon, who has made billions running container ports around the world, is now proprietor of Manila's first major gambling venue, the Solaire Resort and Casino.

Yet Razon is starting his new business when Southeast Asia is ascendant, with the Philippines leading the way. Gross domestic product for the 10 Asean nations was up 5.6 percent in 2012, even while other emerging markets swooned. Under President Benigno Aquino III, GDP in the Philippines jumped 7.6 percent during the first half of 2013, matching China’s. The Philippines Stock Exchange Composite Index rose 21 percent for the year ended on Nov. 6, including reinvested dividends, making it one of the world’s best performers.

Razon is just one of many Asian tycoons who are betting that the time has come for the Philippines. Henry Sy, a Filipino real estate and banking mogul, is scheduled to open a second casino in the Entertainment City complex in 2014. Sy, 89, is the country’s richest man, with a net worth of about $13 billion, according to the Billionaires Index.

Enrique Razon's casino, opened in March, has already attracted 30 junket operators, who organize gambling trips for Asian bettors. Photograph: Courtesy of Solaire Close

Enrique Razon's casino, opened in March, has already attracted 30 junket operators, who... Read More

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Enrique Razon's casino, opened in March, has already attracted 30 junket operators, who organize gambling trips for Asian bettors. Photograph: Courtesy of Solaire

Sy’s Casino

Sy is teaming up with two Macau casino moguls: Australian James Packer and Lawrence Ho, a son of Stanley Ho, who opened the first Macau casino 51 years ago. A third casino will be operated by Japanese gaming magnate Kazuo Okada and a fourth by billionaires Andrew Tan, of the Philippines, and Lim Kok Thay, of Malaysia. Tan and Lim have operated a gaming complex near Manila’s international airport since 2009.

GRAPHIC: Bloomberg Visual Data

GRAPHIC: Bloomberg Visual Data

The Philippine casinos will add to the explosive growth of the Asian gaming business, led by Macau, which has expanded from one casino run by Stanley Ho in 1962 to more than 100 today. Bettors from China fueled a 14 percent revenue surge in Macau in 2012, to $38 billion -- six times the amount taken in by the Las Vegas Strip. Second after Macau is Singapore, whose two resorts pulled in $5.9 billion in 2012, according to data compiled by Bloomberg. Roulette wheels are also spinning in Australia, Cambodia, Malaysia and South Korea. Vietnam joined the parade in July, when it opened its first major casino resort.

Solaire Profitable

After construction is finished, Solaire will have cost $1.2 billion -- $200 million of which is Razon’s own money, he says. In its first full quarter of operation, ended June 30, Solaire reported 3.6 billion Philippine pesos ($83 million) in revenue and net profit of 22.7 million pesos.

The 18,500-square-meter (200,000-square-foot) casino has 1,200 slot machines and 300 gaming tables. The first floor caters to local residents and tourists. The second level is designed for professional gamblers from China, South Korea and other Asian markets, with private rooms and views across Manila Bay. Solaire offers 500 five-star hotel rooms, suites and villas with private terraces overlooking the bay.

Bloomberry shares have been volatile. They soared almost 50 percent in the six months ended on March 16, the date Solaire opened its doors, then plunged through June, rose again, then fell when Razon split with Global Gaming. Shares were down 24.5 percent for the year as of Nov. 6. Shares of Razon’s port company, ICTSI, gained 42.4 percent for the same period.

Infrastructure Woes

The Philippine Amusement & Gaming Corp., the government gambling regulator, which itself operates 13 casinos, predicts that the new resorts will increase gaming revenue in the country to $10 billion by 2017.

Analysts say that to make that happen the Philippines will have to work hard to improve its airports, roads and other infrastructure. The country will eventually be able to compete with other Asian venues, says Marvin Fausto, who oversees about $20 billion as Manila-based chief investment officer at BDO Unibank Inc., which owns Bloomberry shares. “But it will take a longer time,” he says. “Singapore is safe, easy to go around; things work there. There are a lot of things that have to be fixed here.”

Razon agrees.

“We have severe disadvantages in infrastructure, transportation,” he says. “The challenge is getting them to make the first trip; when they come, they realize it’s safe.”

Junket Operators

Razon says that Solaire’s all-important section for high-stakes gamblers is full on weekends. The casino has attracted 30 junket operators, he says, referring to the firms that organize gambling trips for Chinese and other Asian bettors.

“The Philippine gaming industry is still in the nascent stage, and, given Razon’s business acumen, you would expect his project to be a long-term success,” says Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management, which oversees more than $100 billion.

That know-how has mostly been honed in the world’s harbors, where Razon has been a fixture since he was a teenager. His family got into the cargo-loading business before World War II. His father, also named Enrique, wanted Razon to go to college; the son dropped out at the age of 17, saying he wanted to join the family firm.

“I didn’t think the professors could teach me anything about the port business,” Razon says. “I knew what I wanted to do.”

Quick Rise

His father, miffed that the teenager left school, put him to work as a stevedore at minimum wage. The younger Razon quickly worked his way up to operations manager at Manila’s South Harbor. When he was just 20, his father put him in charge of implementing a new contract to manage the port in Jeddah, Saudi Arabia.

In 1986, the People Power revolt dislodged Philippine dictator Ferdinand Marcos, and the new government of President Corazon Aquino privatized the Manila International Container Terminal. In December 1987, the Razons partnered with the country’s Soriano family to bid for the contract to modernize and operate the port. They won. Razon bought out the Sorianos’ 23 percent stake in ICTSI in 2006.

Razon became chairman of the company when his father died in 1995 and started expanding. When Asia’s financial crisis hit in 1997 and 1998, ICTSI was running ports in Argentina, Mexico, Pakistan, Saudi Arabia, Tanzania and Thailand. The meltdown sent the firm into a tailspin, with the devaluation of the peso doubling the company’s dollar-denominated debt to $200 million. Razon sold most of the company’s assets outside of the Philippines to Hong Kong’s Hutchison Whampoa Ltd., controlled by Li Ka-shing, Asia’s richest man.

“I didn’t want to work for the banks for the next 15 years,” he says.

New Beginning

He paid down debt with the cash and started a new global push; his holdings now extend from Brazil to Madagascar to India.

Ricky Razon traverses his empire in his personal Gulfstream G550 jet. When at home, the lean, athletic 6-footer spends time on the golf course and backs local tournaments. Lately, he has a new hobby -- kiteboarding, which he does off the coast of the Philippine island province of Palawan.

Razon found less time for recreation after the dispute broke out with Global Gaming, which forced him to take over daily management of Solaire. He says in an e-mail that Bill Weidner, head of Global Gaming, or GGAM, never returned to Solaire after attending its opening.

“They turned out to be a very expensive, glorified executive-search firm,” Razon says in the e-mail.

‘No Factual Validity’

GGAM is seeking arbitration in Singapore, a neutral jurisdiction. Bloomberry’s allegations “have no factual or legal validity,” the Las Vegas company says in a statement via New York public relations firm Abernathy MacGregor Group. The statement says GGAM was always “actively engaged on the ground in the Philippines on behalf of Solaire.”

Razon quickly replaced GGAM, in early October naming Thomas Arasi, a former chief executive officer of Marina Bay Sands, Las Vegas Sands Corp.’s casino resort in Singapore, as president of Bloomberry.

Razon wants to use his Manila casino as a springboard to other countries, replicating the strategy that made ICTSI a global port operator. He says he expects Macau’s government to allow new entrants to operate in the world’s largest gambling hub in 2020 as existing licenses start expiring.

Asked about his lack of experience in the gaming business, he shrugs.

“It’s not like we invented some product,” Razon says. “Gaming is a well-established industry; you have a better chance of making money than losing.”

Friend of the Slums

Yet, he says, he’s most comfortable at ICTSI’s headquarters at the port of Manila, whose access road is lined with slums -- the occupants of which he provides with medical care and other services through the ICTSI Foundation.

“It’s the best place to work; people don’t bother me here,” the billionaire says. “The difference between container terminals and casinos is containers don’t complain, even if you drop them.”

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To contact the reporter on this story: Netty Ismail in Singapore at nismail3@bloomberg.net

To contact the editor responsible for this story: Michael Serrill at mserrill@bloomberg.net

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