James Packer goes private following Crown cash out

The Packer name and influence is unlikely to be meaningfully involved in Australian corporate life for a very long time.

James Packer in Melbourne in early 2020. Aaron Francis/The Australian

James Packer has formally cashed out his family’s near 24-year link with Crown Resorts, walking away just as his father Kerry’s dream of running a casino in Sydney was about become a reality.

While Packer has come out slightly ahead financially in a $3.3bn deal compared to his initial plans to sell down a stake to his Melco casino partner Lawrence Ho, the emotional toll of multiple royal commissions and intense scrutiny means the Packer name and influence is unlikely to be meaningfully involved Australian corporate life for a very long time.

For Packer it was shortly after 5pm in Los Angeles when the vote to approve US private equity giant Blackstone’s $8.9bn buyout of Crown took place in Melbourne.

Packer still has not publicly confirmed his intention to sell, nor spoken about the Blackstone deal, but it was the numbers in the final count of the vote that did the talking.

With more than 99.9 per cent of the shares cast in favour of the Blackstone takeover the only way the number could be reached is with the backing of Packer’s 37 per cent stake in Crown.

In reality, since the powerful billionaire stepped down from the Crown board in 2018 to have treatment for mental health issues he has been an absent landlord from his gaming empire. This continued into 2019 when he started looking for an exit for his stake.

It was in stark contrast to the period leading up to it when he was deeply involved in the management, driving Crown’s offshore expansion and using all his influence to secure approvals for the $2.2bn Barangaroo hotel and casino complex in Sydney. Barangaroo has a gaming floor ready to go, but it will be Blackstone cutting the ribbon, not a Packer, when regulatory approvals are finally received.

Packer was humbled when NSW kicked off the first brutal public examination of his role at Crown and he later agreed to play no further role in the running of his empire. He continued to co-operate through multiple state-based inquiries and did not resist when Victoria ordered him to sell down his stake to just 5 per cent within the next two years.

Ironically it was Packer’s initial move to sell a 19.9 per cent stake to Ho that kicked off the string of events for an exit. It was Ho’s background and claimed commercial links with his late father, Macau casino tycoon Stanley Ho, that NSW wanted to probe. This soon turned into a broader examination of Crown’s fitness to operate a new casino at Sydney’s Barangaroo in the wake of the arrest of 19 staff in China in 2017.

Damning evidence around Crown’s culture that emerged from an inquiry headed by former Supreme Court judge Patricia Bergin sparked separate royal commissions in Victoria and Western Australia.

The Crown stake is held by Packer’s private wealth vehicle Consolidated Press Holdings and this is where the Blackstone billions will flow, pending regulatory approval of the deal.

The funds are now likely to be reinvested to make up for the hundreds of millions in dividends that went to CPH over the years from its holding in Crown, which had peaked at 50.1 per cent.

But these are set to be private market investments that no longer come with control, allowing Packer to remain out of the spotlight.

Last year CPH paid Packer $111.5m in dividends, on the back of $127m in 2020. CPH has been increasing its technology investments in recent years, including through Seek co-founder Paul Bassat’s Square Peg venture capital fund. Elsewhere he has exposure to luxury properties and has invested in digital banking start-up SocietyOne.

It’s a long way from his father Kerry’s listed investment vehicle PBL that housed nearly $10bn of assets spanning television, magazines, financing, casinos and investments including Seek.com, Ticketek and nineMSN.

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