Posted on: August 30, 2024, 04:12h.
Last updated on: August 30, 2024, 04:12h.
Melco Resorts Chairman and CEO Lawrence Ho has deployed a second special purpose acquisition company (SPAC) on the Nasdaq stock exchange.
Black Spade Capital, Ho’s family investment vehicle that’s named after the playing card suit that is often linked to good luck, this week announced the initial public offering of Black Spade Acquisition II. The blank-check entity is offering 15 million shares priced at $11.50 each.
Each ordinary Class A unit includes $10 worth of the company and $1.50 worth of a redeemable warrant. SPACs are typically anchored by established companies or investors to raise capital to buy assets within a given time.
Black Spade is headquartered in Hong Kong and backed by Ho, whose net worth is around $1 billion. Ho’s fortune is less than half of what it was before the COVID-19 pandemic shuttered his casino resorts in Macau where Melco is most invested.
Diversifying Portfolio
Melco Resorts owns and operates three integrated resorts and six gaming cafés in Macau, the Chinese Special Administrative Region where gambling on slot machines and table games is allowed. Melco’s portfolio also includes City of Dreams Mediterranean in Cyprus.
Melco, also traded on the Nasdaq, has seen its share price plummet since the onset of the coronavirus pandemic. Melco shares have crashed 76% over the past five years from $21 to a close of just $5 today.
Ho, the largest individual shareholder in the organization, has naturally seen his wealth diminish. One of the late Stanley Ho’s 17 children, the so-called “King of Gambling” who held a monopoly on casinos in Macau until Portugal handed back the enclave to China around the turn of the century, Ho is looking to lessen his dependency on the global gaming industry in favor of new markets he’s bullish on.
In Black Spade Acquisition II’s investor presentation, the SPAC says its investment focuses are on the entertainment, lifestyle, and technology industries, with a particular emphasis on artificial intelligence and how it might assist those sectors.
Black Spade Acquisition, the company’s first SPAC offering that held its IPO in August 2021, raised $169 million. Earlier this year, the blank-check firm merged with VinFast Auto, an electronic vehicle manufacturer based in Vietnam.
Macau Win-Win
Melco Resorts in December 2022, along with the five other casino operators in Macau, agreed to collectively invest billions of dollars into their resorts in exchange for new 10-year gaming licenses. The Macau SAR Government required that 90% of the pledge go towards nongaming projects.
The Macau government is seeking to become better known for its leisure, entertainment, hospitality, and events offerings and capabilities.
Melco’s nongaming commitment was initially $1.24 billion. The monetary amount increased by 20%, or $248 million, after citywide gaming revenue in 2023 eclipsed a threshold that escalated the operators’ nongaming minimum.
Ho said in March that the company had already carried out its nongaming guarantee by investing in improvements and projects like amusement parks and other family-oriented amenities at Macau’s City of Dreams, Studio City, and Altira resorts. Should Ho’s Black Capital Acquisition II find an AI firm that can improve or streamline Melco’s nongaming segment, the SPAC play could be a win-win for the billionaire.
