JPMorgan Buys Big Voting Block of Star Entertainment Shares

Posted on: October 7, 2024, 03:54h. 

Last updated on: October 7, 2024, 03:54h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

JPMorgan Chase & Co. (NYSE: JPM) acquired a sizable equity stake in downtrodden Australian casino operator Star Entertainment.

According to a recent filing with Australian securities regulators, the New York-based bank purchased 5.47% of the gaming company’s voting equity. News of the JPMorgan investment arrived about a month after Star was booted from the Australian Stock Exchange (ASX) for failure to release financial results as scheduled. Star is the largest publicly traded casino operator in that country.

Amid mounting regulatory concerns, including questions about its suitability to hold gaming licenses, shares of Star have been in a tailspin for several years. Year-to-date, the stock is off about 50% following losing two-thirds of its value last year and 52% in 2022.

JPMorgan hasn’t commented on its plans for the Star investment, but it is clear the gaming company has immediate financing needs with which the bank and other investors could assist. For example, Star recently opened the multi-billion dollar Queen’s Wharf project in Queensland and it already needs cash — something the New South Wales government has balked at providing.

Star Saga Continues, Could Sell Assets

News of the JPMorgan investment is the latest chapter in the ongoing Star saga. Last month, the company told investors it could sell various assets in a bid to raise cash to stay afloat. It’s not yet clear if the bank or other investors are pushing the casino operator to make divestments.

Earlier this year, Star told regulators that it believes it’s still not fit to run the Sydney property and that it’d like to extend its agreement with the government for oversight of that integrated resort.

In May, Australian media outlets reported that Hard Rock International — the gaming arm of Florida’s Seminole Tribe — was interested in potentially acquiring Star. However, Hard Rock swiftly refuted that rumor and there’s been no public takeover chatter since then.

Speculating on JPMorgan’s Star Interest

It’s not clear exactly what JPMorgan’s plans are for its Star stake or if the bank is planning to be an activist investor. Activist shareholders typically prod the companies in which they’re invested to make changes – sometimes dramatic –including asset divestments or outright sales.

Star is ripe for any of the above and could be a compelling target for a suitor that’s willing to work with the Australian government to put Star’s regulatory woes to bed.

It’s also possible that Chase could team up with another Star investor to provide financing to the gaming company. Australian asset manager Perpetual took a stake in the operator earlier this year, but there are no indications as of yet that Chase and Perpetual are in discussions of any kind.