Universal Entertainment Group is in search of a special acquisition company (SPAC) to partner, to take Okada Manila public in the U.S. It’s an idea the company has been contemplating for around three years, and Universal feels the time is right to move forward with an initial public offering (IPO).
It isn’t alone, as Smartkarma Innovations, an independent investment research firm, agrees, saying that the idea should be appealing to investors.
Appeal to investors
Singapore-based Smartkarma’s Howard Klein gave his thoughts on the proposed IPO on Thursday, supporting the growing interest of gaming companies to turn to SPACs in order to make it to public trading markets, such as NASDAQ or the New York Stock Exchange (NYSE) in the U.S., as well as others around the world.
He feels that the publicity granted these types of agreements has already proven to be lucrative, adding: “Given the recent track record of [SPAC] IPOs rocketing market caps soon after IPO issuance, the move by Universal will present an attractive offer to investors.”
Universal, which owns Okada Manila through its Tiger Resort, Leisure and Entertainment business, has reportedly already begun the process to land a dedicated SPAC, but hasn’t yet named a possible nominee.
Greater corporate value
However, as soon as this can be arranged, the company needs to go public in order to raise money for growth and to gain “greater corporate value.” First, however, it will have to solve the problems brought on by COVID-19.
Universal’s fiscal year 2020 results wasn’t great; some could even suggest it was catastrophic. The company posted a net loss of $181.8 million, which was around three and a half times the $49.12 million loss it had in the prior year.
Okada Manila was hit even harder, posting a loss of $85 million for the most recent fiscal year. As a result, the casino made a number of substantial cuts in order to save money, according to a recent filing.
Still, there is considerable potential for a turnaround, according to Klein. He says for investors the risk of any IPO is low .
Klein added: “The sponsor is Universal [Entertainment]…, a firmly-established licensed casino operator in a robust market coming out of a [COVID-19] pandemic-induced torpor. The prospects for a successful launch of Okada Manila as a public traded Nasdaq company are solid.
“Okada Manila is a well-established, fully financed player with a genuine moat in the Manila gaming market it shares with only three other properties in the city’s Entertainment Zone.”