Bankers test interest in Packer’s stake as block trade looms

Equity capital markets bankers are testing institutional investor interest in James Packer’s Crown stake in anticipation that he will sell. Picture: Aaron Francis

A $2bn block trade could be launched within days in the Australian equities market following the findings of an inquiry into Crown Resorts, sources say.

On Tuesday, the commissioner of an inquiry into Crown Resorts advised the NSW government to force James Packer to sell down his 36.7 per cent stake in the casino company, which is worth about $2.5bn.

DataRoom understands that equity capital markets bankers have already been testing institutional investor interest in Mr Packer’s Crown stake in anticipation that he would be a seller.

On Tuesday, former NSW Supreme Court judge Patricia Bergin ruled that Crown was not fit to operate its $2.2bn Barangaroo Casino while Mr Packer held the 36.7 per cent interest.

With shares in the company halted at $10.15, market sources say institutional investors would be prepared to snap up Mr Packer’s shares at about $8.50 each.

Expectations are that any sell down would likely be by way of a block trade into the market, with questions surrounding what strategic buyers would be there for Crown.

Market analysts say Las Vegas Sands, which has previously been tipped as a potential buyer, has more interest in Macau and Singapore investments.

Wynn Resorts, which has previously looked at buying Crown, is not believed to be showing any appetite to buy Crown or Mr Packer’s stake.

However, one potential buyer could be Wynn Resorts investor Galaxy Entertainment.

A number of groups would have an issue buying into a gambling giant from a probity perspective, ruling out a number of private equity firms as possible buyers.

Any buyer of an interest in the business amounting to more than 10 per cent requires regulatory approval.

Yet Blackstone may launch a takeover.

The New York-based buyout fund purchased a 9.99 per cent stake in Crown Resorts from Lawrence Ho for $550m in April.

Blackstone has owned Las Vegas casino Cosmopolitan, Hilton Hotels and the real estate of MGM’s Bellagio resort in Las Vegas.

From a takeover perspective, local rival Star Entertainment can’t be discounted, with investment banks Macquarie Capital, Citi and UBS said to be at least running the numbers.

While investment bank UBS has typically represented Mr Packer’s interests, some suspect Morgan Stanley or Goldman Sachs could be around the hoop this time around.

Some believe the sell down could happen within just days, once shares in Crown resume trading.

Should all of his interest be offloaded to institutional investors, it would be one of the largest block trades to come to market in Australia for some time.

Shell sold $3.5bn worth of stock into the Australian market with a 2017 exit out of Woodside Petroleum, while Chevron staged a $4.8bn exit out of Ampol (formerly Caltex Australia) in 2015.