TLDR
- Macau’s six casino operators pledged MOP$9 billion (US$1.1 billion) to a new government guidance fund.
- The fund starts with MOP$20 billion (US$2.5 billion), including MOP$11 billion from government reserves.
- Sands China’s Venetian Macau gave the most at about US$285 million, with Galaxy close behind at US$281 million.
- The money counts toward the operators’ non-gaming investment duties under their 10-year concessions.
- An analyst said the move is neutral for earnings but warned the money may be tied up for over 15 years.
Macau’s six casino operators have agreed to put MOP$9 billion (US$1.1 billion) into a new government fund. The fund aims to help the city grow industries beyond gambling and tourism.
The contributions will count toward the investment promises the operators made under their current 10-year gaming concessions.
Representatives signed agreements on Friday to become limited partners in the Macao SAR Government Guidance Fund No 2, Limited Partnership Fund. Chief Executive Sam Hou Fai and other senior officials attended the signing, which marked the official start of the fund.
How the Fund Will Work
The fund begins with MOP$20 billion (US$2.5 billion) in capital. Along with the operators’ money, the government is adding MOP$11 billion (US$1.4 billion) from its fiscal reserves.
The fund will invest in emerging industries, industrial upgrades and technology start-ups. It will also support turning scientific research into commercial products.
Projects tied to national strategic goals are included as well. So are efforts linked to Macau’s cooperation with Hengqin and growth across the Guangdong-Hong Kong-Macau Greater Bay Area.
The government says the goal is to draw public and private money into Macau’s long-term development. It also wants to widen the city’s economic base.
Sands and Galaxy Make the Largest Pledges
Stock exchange filings showed how much each company is putting in. Venetian Macau, a unit of Sands China, pledged about MOP$2.30 billion (US$285 million).
Galaxy Casino Ltd, part of Galaxy Entertainment Group, came next with about MOP$2.27 billion (US$281 million).
Wynn Resorts (Macau) pledged up to MOP$1.37 billion (US$170 million). MGM Grand Paradise, a unit of MGM China, committed MOP$1.24 billion (US$153 million).
SJM Resorts pledged MOP$992.7 million (US$123 million). Melco Resorts (Macau) committed MOP$828 million (US$102 million).
Galaxy said taking part fits its overall investment and development plan. The company also said it supports economic diversification and closer ties between Macau, Hengqin and the Greater Bay Area.
Secretary for Economy and Finance Ng Wai Han spoke at the ceremony. She said Macau is following national development plans and carrying out its “1+4” diversification strategy to make its economy more resilient.
Ng, a former head of the Gaming Inspection and Coordination Bureau, said diversification is a shared duty for the government and all parts of society. She added that the operators have met their non-gaming investment commitments so far.
She said the fund came out of talks between the government and the companies. She described it as a sign of public-private cooperation.
Seaport Research Partners analyst Vitaly Umansky said each operator’s contribution equals about 6.9% of its non-gaming pledge. He described the split as proportional and in line with the concession agreements.
Umansky said the deal is mostly neutral for earnings and cash flow. He called it slightly positive for relations with the government.
He noted that the operators are swapping some building commitments for passive financial investments. That removes construction risk and running costs.
However, Umansky said the money will be locked up for more than 15 years. He doubted the fund would deliver strong returns and warned the capital might never be returned.
