Sun International bets on Latin America to boost revenue
Sun International plans to expand in Peru and enter the Brazilian market after merging with Chile’s Dreams SA, its CE said, as the gaming and hotel operator bet on Latin America to offset slow growth at home.
Stiff competition, fewer casino licenses for which to bid and consumers feeling the pinch in SA have pushed the gaming group to broaden its horizons to Latin America.
Sun, which pushed deeper into Latin America with its merger with Chile’s Dreams SA in June and holds 55% of the merged entity, is banking on its expansion in the casino and gambling sector to boost revenue.
CE Graeme Stephens, who steps down in April, said the firm would bid for more casino licences in Chile next year after its merger with Dreams SA, which has a portfolio of hotels, casinos and restaurants. "Plans are well advanced to expand in the region. We have plans for expansion in Peru and further down the line Brazil seems to be opening up to licensed casinos," said Stephens. He did not give any financial details.
Sun has sold its assets in several African countries and announced plans to quit Nigeria, the continent’s biggest economy, to focus on its casino business in SA and Latin America. The merged entity, Sun Dreams, has a portfolio of assets in Chile, Colombia, Panama and Peru, with 13 properties that between them have 6,500 slot machines, 33 table games, six hotels and 25 restaurants.
International casino and gaming operators were eager for an opening of Brazil’s market after the country’s cash-strapped government said it was in talks with legislators about legalising gambling.
Stephens said the company had a low level of debt on its Latin America balance sheet, giving Sun sufficient capacity to finance new deals. "Roughly 30% of group revenue now comes from Latin America and over the next few years we expect this proportion to increase as we capitalise on the opportunities that are in the pipeline," he said.
Although Sun has invested in Latin America, the group still earns 69% of its revenue and 73% of its profit in SA. The group is also exploring new growth opportunities in online gaming through its small online sports betting company, Sunbet, bought in 2014, "should the law change to legalise online casinos in SA," Stephens said.