The new Casino Royale

A plot of land on a trop­i­cal is­land will de­liver a $1m a day jack­pot to a group of Scot­tish en­trepreneurs, writes Stephen Breen

The Herald Business - - Amazing Holdings -

WHEN Scot­tish ar­chi­tect Tim Pot­ter first vis­ited the Penghu is­lands in the Tai­wan Straits al­most a decade ago, he must have felt as though he had stum­bled on to the Ba­hamas of the 1940s – crys­tal clear aqua­ma­rine wa­ters, pris­tine beaches and reefs, and barely a tourist de­vel­op­ment in sight. Pot­ter, a long-time res­i­dent on main­land Tai­wan, im­me­di­ately called his busi­ness part­ner Ian Irvin in Ed­in­burgh and de­clared: “I have found the place where I am go­ing to die.”

Irvin flew out and also fell in love with the un­spoiled beauty of this lit­tle piece of par­adise that had some­how man­aged to es­cape the at­ten­tion of the world’s tourism in­dus­try. The

fact that, bizarrely, wild this­tles were grow­ing on the finest stretch of land they could find on the group of 64 is­lands con­vinced the Scots it was their fate to de­velop the site.

Irvin, an ac­coun­tant and en­tre­pre­neur who was group fi­nance di­rec­tor of the £65m pub­lic com­pany Mag­num Power, and Pot­ter, formed Amaz­ing Hold­ings with plans to build an up­mar­ket beach­front ho­tel that could pull in well­heeled vis­i­tors will­ing to pay $1000 a night. The pair were con­vinced they were on to a win­ner, but four years ago, their luck got even bet­ter when the Tai­wanese gov­ern­ment made the sur­prise an­nounce­ment that it was con­sid­er­ing al­low­ing gam­bling on the is­lands.

What be­gan as a rel­a­tively mod­est tourist pro­posal on Fongkue Beach now has the po­ten­tial to be a gam­bling gold­mine that could rake in a stag­ger­ing $1m dol­lars a day in clear profit. Amaz­ing has teamed up with Las Ve­gas-based casino leg­end Larry Woolf, whose Nave­g­ante group would op­er­ate the de­vel­op­ment on their be­half. When it comes to gam­bling, Woolf is one of the in­dus­try’s gen­uine big-hit­ters, who has run a string of casi­nos in Ne­vada, and in 1990 he opened what be­came the first $1bn casino in Ve­gas, the MGM Grand.

The world’s big casino op­er­a­tors have been des­per­ate to get into south-east Asia for decades to be right on the doorstep of some of the world’s most fa­nat­i­cal gam­blers. The num­ber of gen­uine high-rollers – the type of steely-nerved in­di­vid­u­als who wouldn’t flinch at lay­ing down $1m a night in chips – is rel­a­tively small and known to all the big op­er­a­tors, and ac­cord­ing to Irvin, 70% of them are in south-east Asia and Ja­pan.

The first Klondike-like scram­ble to get into this lu­cra­tive mar­ket­place came in 2002 when the Chi­nese au­thor­i­ties is­sued three casino li­cences in Ma­cau, the for­mer Por­tuguese colony which is just one hour from Hong Kong by fast ferry. No less than 20 of the big boys ap­plied to get into Ma­cau, which has been a roar­ing suc­cess. It was pre­dicted to gen­er­ate $6.8bn last year – out­strip­ping even Ve­gas it­self by an es­ti­mated $800m.

In Jan­uary, Sir Richard Bran­son an­nounced he was close to fi­nanc­ing a deal to build a £1.5bn casino in Ma­cau. The Las Ve­gas Sands and Wynn Re­sorts, two of the world’s lead­ing gam­ing com­pa­nies, have al­ready built mega­casi­nos in Ma­cau. It is thought gam­bling gi­ants such as MGM Mi­rage may fol­low suit.

If the Tai­wanese au­thor­i­ties do give the green light for gam­bling on the Penghu Is­lands, Irvin, Pot­ter and fel­low Scot David Mathew­son – a for­mer di­rec­tor of mer­chant bankers Noble Grossart – are at the head of the queue to cash in. They are con­fi­dent they are the only op­er­a­tor with a big enough par­cel of land to build a casino and be­lieve they are two years ahead of any po­ten­tial ri­val. Hav­ing an ex­pe­ri­enced op­er­a­tor like Woolf on the board is an­other trump card.

Through a wholly-owned Tai­wanese sub­sidiary, their AIM-listed com­pany is plan­ning to spend at least £300m on a world­class 600 bed­room lux­ury ho­tel, and a mul­ti­level casino over 130,000 sq ft.

The com­pany is “70% conf ident” the Tai­wanese gov­ern­ment will le­galise casi­nos un­der the Re­mote Is­lands Act be­fore elec­tions in De­cem­ber, but opin­ion polls sug­gest a more pro-busi­ness party will come to power then, mak­ing the gam­ing dream even more likely.

Even if the Tai­wanese au­thor­i­ties un­ex­pect­edly de­cide against le­gal­is­ing casi­nos, Amaz­ing is go­ing to build a 100-room lux­ury ho­tel on part of their 27-acre beach­front plot and hope to break ground later this year.

“The Penghu Is­lands are the best kept se­cret in south-east Asia,” said Irvin. “It is only a 40 minute flight from Hong Kong and I can’t

un­der­stand why it isn’t crawl­ing with tourists. If you can imag­ine the Ba­hamas but you strip away all the west­ern de­vel­op­ment and leave all the in­fra­struc­ture like four lane high­ways and a fan­tas­tic mo­bile phone net­work, that’s what they have.

“In­fra­struc­ture-wise, it doesn’t get bet­ter. It is stag­ger­ing – I can’t get my head around it. We’ve sent quite a few in­vestors out there and they have come back to us and said: ‘This is re­ally in­cred­i­ble – do you guys re­alise what you’ve got?’ We are pi­o­neer­ing and so are the au­thor­i­ties on the Penghu Is­lands.” It was a change in the law in 1998 al­low­ing for­eign­ers to buy on the Penghu Is­lands that opened the door to Irvin and Pot­ter. The site they iden­ti­fied was worth $300,000 as farm land, but the Scots of­fered the land-own­ers $7m on con­di­tion that it was re-zoned for a ho­tel. The deal was in­cred­i­bly com­pli­cated be­cause the site was bro­ken into a patch­work of more than 100 parcels of land owned by in ex­cess of 300 peo­ple.

They used a lo­cal gov­er­nor to act as an hon­est bro­ker and are con­vinced th­ese close ties with the lo­cals – and the fact that they have been on the ground for years ahead of any po­ten­tial ri­vals – will help make the project a suc­cess.

“The peo­ple there are quite like the peo­ple from the West­ern Isles,” said Irvin. “If you come in and bang your first on the ta­ble and talk about kick­ing ass, they will tell you where to get off, but if you re­spect them and get close to then, you can do all sorts of things.”

Irvin and Pot­ter set up Amaz­ing Hold­ings in the Isle of Man and bor­rowed the $7m by is­su­ing 14 $500,000 deben­tures which were con­verted to shares when the com­pany listed on AIM in 2005. Irvin ad­mits the news in 2003 that casi­nos might be li­censed on the is­lands threw the com­pany into “a bit of a tail­spin” for a cou­ple of months. “We didn’t know any­thing about gam­ing, but we knew that it made a good project even bet­ter.

“I met var­i­ous fi­nanciers in south-east Asia and they all said they would write us a cheque for $200m in a heart­beat if we had a casino li­cence – and th­ese guys don’t take risks. Bill Wei­d­ner (CEO of the Las Ve­gas Sands) likened gam­ing to spit­ting on the ground – you can’t miss. If gam­ing is al­lowed, we’ve got a foot­print and we are ca­pa­ble of tak­ing on a casino and an­other ho­tel.”Irvin, a for­mer Royal Navy sea­man and kirk elder, is a mod­est man who in­sists he didn’t get into this de­vel­op­ment to make mil­lions. But the po­ten­tial prof­its are so stag­ger­ing they could make any man’s head spin, and as we meet in a Star­bucks café in Ed­in­burgh, Irvin strug­gles not to get car­ried away.

“When I got into it at first the goal was to make a bit of money to buy an MG sports car,” he in­sists. “Now, I try not to think about it, but Larry says the com­pany can make $1m a day. We didn’t go into this to have a casino and if you go in to make a lot of money, that’s the wrong way. You have got a re­spon­si­bil­ity to your share­hold­ers and wider so­ci­ety and you have got to sort that out first.

“It’s fun, I’m en­joy­ing it, but I try not to think too much about the money. If it all comes good, I might take a bit of time off.”

If th­ese canny Scots do hit the casino jack­pot, Irvin might find him­self shop­ping for a lot more than an MG.

Hit­ting the jack­pot: Ian Irvin (left) re­flects on an amaz­ing busi­ness story based on a gi­ant casino (artist’s im­pres­sion above) on the Penghu Is­lands (above right)

Much to ponder: Irvin’s com­pany could be mak­ing $1m a day in prof­its

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