GGRAsia – 26 Capital-Okada Manila delay can aid investors: analyst

26 Capital-Okada Manila delay can aid investors: analyst

Feb 13, 2023 Newsdesk Latest News, Philippines, Top of the deck

Further delay in a United States stock market flotation for an entity linked to the Okada Manila casino resort in the Philippine capital could actually make the pricing for the exercise more compelling, suggests a note from analyst Howard Klein, in an article posted to the Smartkarma platform.

The entity to be listed is due to be created via a merger between U.S.-listed 26 Capital Acquisition Corp and a promoter of the Okada Manila property.

“Our contention is that the legal delay… will put… in full force… an estimated 6.7 percent rise in revenue as recovery momentum increases toward the third quarter,” wrote Mr Klein, referring to the Manila gaming market.

“26 Capital valuation of Okada [Manila] at US$2.5 billion with a US$10 per share offer price could run up quickly as market momentum turns positive sentiment higher,” he added.

Mr Klein further stated that his “on-the-ground sources in Manila” believe the flotation in the U.S. “will move forward, regardless of the impending delay”.

U.S.-listed 26 Capital is suing Tiger Resort, Leisure and Entertainment Inc – the promoter of Okada Manila, and itself a unit of Japan’s Universal Entertainment Corp – urging the prompt consummation of a merger between the two sides that had been announced in October 2021.

The 26 Capital entity – a special purpose acquisition company (SPAC) listed on the Nasdaq stock market – is led by Jason Ader, founder of investment management firm SpringOwl Asset Management LLC. Mr Ader served between 2009 and 2016 as an independent director at U.S.-based casino operator Las Vegas Sands Corp.

In January, Universal Entertainment said that fourth-quarter gross gaming revenue (GGR) at Okada Manila had risen by 49.7 percent year-on-year, contributing to a full-year 2022 GGR tally that went up by 81.5 percent.

The improvement coincided with the Manila casino market reopening in the first half of 2022, after a period of closures and capacity limitations linked to the Covid-19 pandemic.

During the year, it had been announced that Okada Manila had from mid-April been permitted to operate online casino business from its bricks-and-mortar premises.