MANILA, Philippines – The market debut of local casino operator Travellers International Hotel Group, Inc., did not quite meet expectations as it ended its first day of trading below its IPO price of PhP 11.28. It closed at PhP 11.26 or 0.18% lower.
Wary investors and tax issues hounding the Philippine gaming sector affected Travellers’ debut in the Philippine Stock Exchange (PSE), the Philippines’ local bourse.
According to reports, local investors were not too keen to pick up gaming stocks with some fund managers saying that their clients were mandated not to deal in companies involved in gambling. Travellers’ listing also happened amidst a cooling investor sentiment towards emerging markets on the back of fears of the US Federal Reserve tapering its bond-buying stimulus program sooner.
In addition, the gaming sector is also facing a tax battle with the Bureau of Internal Revenue (BIR). Up until now, gaming firms in the country have only paid a 5% franchise tax on gross gaming revenues. Now, the BIR wants them to pay income tax.
Travellers is a joint venture between Alliance Global Group, Inc. and Malaysia’s Genting Hong Kong and it operates Resorts World Manila (RWM), the Philippines’ first integrated casino resort. An IPO of 1.57 billion primary shares and an over-allotment option of 236 million shares raised for the firm some PhP 20.41 billion. Travellers had initially planned to raise as much as Php 42.30 billion but had to scale down its prospects in July when the markets became volatile.
Proceeds from the firm’s local listing will be partly used to finance the expansion of RWM which will cost about US$ 650 million. Aside from the IPO profits, the expansion will be funded using operating cash and Travellers is also looking at the possibility of tapping banks for funding.
The RWM expansion, expected to be completed by 2017, will double the integrated resort’s rooms and gaming facilities. Travellers will add about 1,100 hotel rooms to its existing portfolio when Hilton Manila and Sheraton Hotel Manila start operations and when the expansions of Maxims and Marriott Hotels are completed. As RWM ramps up its hotel rooms, this will allow it to grow its gaming facilities in accordance to regulatory guidelines. Upon completion of its hotel expansion ventures, RWM will be allowed to add up to 285 gaming tables, 1,710 slot machines, and 1,710 entertainment table games.
In addition, Travellers is also opening in late 2017, Resorts World Bayshore, its second entertainment facility at the state-owned PAGCOR Entertainment City.
