Taiwanese-backed Royal International Corp began investment road shows last week to raise funds to build the biggest casino-hotel complex in Ha Long Bay. It will be the country’s first casino and hotel operator to issue shares, with plans to launch the initial public offering within the next few months. The aim is to amass US$52 million to build two five-star hotels and an entertainment area on Bai Chay Beach.
Royal deputy general director Ha Quang Long said the company would auction shares in March following investment promotion campaigns in Hanoi and HCM City.
The company plans to sell 5.48 million shares at the starting price of 150,000 dong per share (US$9.4 or 15 times higher than its par value.
Long said Royal was fixing such a high reserve price because it was confident in its unique casino business.
“A casino is a very special business,” said Long. “A casino produces an especially high profit. If we operated hotels only, we would not set such a high price.”
Royal was the only company in Ha Long Bay that won the right to open a 3,380-square metre gaming club in 2002. It earned revenues of US$7 million in 2004, accounting for 70.26% of the company’s total revenue.
Although gambling remains socially sensitive a number of countries have been lured by its huge profits and have ventured into the business. I Singapore recently unveiled plans to build a couple of giant casino-hotels to attract tourists.
A casino business, which in Vietnamese is called an “electronic gaming club with bonus”, requires a special licence and is exclusively for foreign passport holders.
Several hotels have won licences to run a casino including the Li Lai International Club in Quang Ninh province. Lao Cai International Club in Lao Cai province and Do Son Casino in Hai Phong.
However, the government is imposing a ban on new casino projects making Royal’s casino even more distinct. Owing to the likely opening of a casino the US financial group Pasco appraised Royal’s share price at US$36.9, Royal said.
Long said another advantage the company had was the location. “We hold land-use rights on more than 30 hectares in Ha Long Bay, the hottest tourist spot in the country,” he said.
“Ha Long Bay is a wonder of the world,” Long added. “When we finish our project it will become the biggest hotel and entertainment complex in Vietnam.”
Royal now has 112 hotel rooms. It will build two more five-star hotels with 500 rooms and a shopping mall and theatre, making it the third biggest casino-hotel in Asia after the Genting in Malaysia and Lisboa in Macau.
Royal was initially a joint-venture between Taiwanese investors and a Vietnamese company in 1994 before it was transformed into a joint-stock company in June by 2005. It has a chartered capital of US$21 million, of which Taiwanese investors hold an 85% stake and Vietnamese investors the rest.
Royal is among the first foreign-invested joint ventures to win a licence to turn into a shareholding venture on a pilot basis. Others are Taya, Interfoods, Taicera, Tungkwang and Focal.
To date, Taya is the only company allowed to list on the HCM City Securities Trading Centre.