Dec. 13 (Bloomberg) -- Billionaire John Gokongwei will become a partner of Japanese pachinko magnate Kazuo Okada to build a Manila casino, projected to cost more than $2 billion in what would be the biggest such investment in the Philippines.
Robinsons Land Corp., controlled by Gokongwei, signed a preliminary agreement with Okada’s Universal Entertainment Group for the project, the Manila-based developer and Tokyo-based Universal said in separate statements yesterday.
Okada, who holds a casino license awarded by the Philippine government, and former partner Wynn Resorts Ltd. Chairman Steve Wynn are feuding over accusations of bribery. While the Philippines has said it will cancel Okada’s license if bribery is proven, analysts such as Macau-based Grant Govertsen at Union Gaming Group said they are concerned about the appetite for such a large number of casinos in the Southeast Asia nation.
“It can hardly support two integrated resorts,” said Govertsen. “We’d doubt if these companies will be able to generate a meaningful return for their investment.”
Universal, which makes the pinball-like machines used in pachinko parlors where customers play for prizes, said in September 2011 it would invest $2.3 billion in the project.
This figure “stands for now” and details and exact amount will be known next month when a final agreement is reached, Universal spokesman Nobuyuki Horiuchi said by telephone today. Robinsons Land President Frederick Go could not immediately provide a project cost today.
Fountains, Sand Beach
The final contract will be signed by Jan. 31, according to Universal’s statement. In addition to the casino, the resort complex will also have luxurious hotels, restaurants, commercial facilities, a budget hotel, residences and “Vegas-style water fountains and an enormous indoor pool with real sand beach covered by a huge glass dome,” Universal said.
Robinsons Land will be in charge of the development of commercial facilities and budget hotels and housing facilities for the project, Universal said.
Okada can’t open a casino in Manila if bribery accusations against him are proven, Cristino Naguiat, chairman of Philippine Amusement & Gaming Corp., said on Dec. 10. Philippine justice department is investigating bribery allegations against Okada, presidential spokesman Edwin Lacierda said Nov. 19.
Gokongwei would have weighed the risks for forging a partnership with Okada, Richard Laneda, an analyst at Manila-based COL Financial Group Inc. said.
“Gokongwei group is known to be very conservative and they don’t make investments without weighing the risk,” said Laneda. If the license is canceled later “then the Gokongwei group can bid for it or negotiate with whoever gets.”
As part of the agreement, Robinsons Land, a builder of offices and homes, will acquire majority of Eagle I Land Holdings Inc., which owns 30 hectares in the government’s PAGCOR Entertainment City project, and purchase a minority stake in Tiger Resorts, Leisure and Entertainment Inc., which owns the license to develop and manage a casino resort in the complex, according to the statements.
Shares of Universal rose 6.5 percent to 1,409 yen at the close in Tokyo trading, the most since July 13. Robinsons Land was unchanged at 21.50 pesos at the close in Manila, JG Summit Holdings Inc., Gokongwei’s publicly-listed holding company, climbed 1.5 percent to 39.50 pesos.
Okada and Gokongwei’s venture will compete with partnerships between Philippine billionaire Andrew Tan and Genting Hong Kong Ltd.; a venture of Philippine billionaire Henry Sy and Melco Crown Entertainment Ltd.; and Bloomberry Resorts Corp., controlled by port magnate Enrique Razon.
Melco Crown signed an agreement with Belle Corp., PremiumLeisure & Amusement Inc. and SM Investments Corp. to jointly invest $1 billion in the Manila casino resorts. Genting Hong Kong and Alliance Global Group Inc. plan to jointly invest $1.2 billion in the next three years on their new casino project Resorts World Bayshore, they now operate Resorts World Manila.
Robinsons Land is the nation’s second-largest shopping mall operator, while parent JG Summit’s other ventures include Cebu Air Inc., the nation’s biggest budget carrier.
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