Billionaire Chen Lip Keong has expanded NagaWorld in Phnom Penh from a barge to a 700 room hotel - shown here in 2014 - to Naga2, a US$400 million addition opening later this year aiming to lift NagaWorld into the top rank of Asia's casino resorts. (Credit: Muhammad Cohen)

Cambodia Casino Deal He Didn't Want Returns Malaysia's Chen To Billionaire Ranks

Forbes | 26 March 2017

After a two year absence, Malaysian casino and property mogul Chen Lip Keong is back on the Forbes list of the world’s billionaires. Dr Chen – he was a physician before turning to business – is the CEO of NagaCorp, the Hong Kong listed company that runs the extraordinarily successful NagaWorld casino resort in Cambodia’s capital Phnom Penh. Dr Chen also controls two Malaysian property developers. He returns to the billionaire ranks thanks to a deal that he never wanted that aims to propel NagaWorld into the top rank of Asian integrated resorts.

Dr Chen came to Cambodia as part of Malaysia’s “Prosper Thy Neighbor” program to assist nearby Southeast Asian countries, leading to a role as an economic adviser to Cambodia’s Prime Minister Hun Sen. Through that came the 70 year license for a casino in Phnom Penh. What would become the largest entertainment hub in Indochina began taking bets in 1995 on a barge in a branch of the Mekong River.

NagaWorld evolved into an onshore enterprise, starting with a casino, adding hotel rooms, more gaming areas, about a dozen places to eat and drink and meeting space that’s popular for weddings as well as commercial and government confabs. All of it in a nation that during the late-1970s had been set on its head by Pol Pot’s Khmer Rouge and its vision of some pre-industrial utopia that included emptying the cities and summarily executing more than 1.5 million Cambodians, an estimated 25% of the population, with instruments as crude as shovels. After the overthrow of the Khmer Rouge, Cambodia was impoverished and bereft of even basic services and institutions; among ealry Naga acts of corporate social responsibility, buying uniforms for the police.

Business grew at NagaWorld as Cambodia recovered, tourists returned – only foreign passport holders are allowed to gamble, though other NagaWorld facilities are open to all – and an expatriate community took root again in what’s one of Southeast Asia’s more charming capitals. NagaWorld, now with about 700 hotel rooms, 240 gaming tables and 1,600 electronic gaming machines, outgrew its site and planned to expand across the street. Connected to the original via a shopping area, Naga2 would basically double the size of NagaWorld and give it greater regional appeal with convention facilities and a theater, as well as hotel suites for high rollers with a gaming table in the room.

When Dr Chen went to banks, with Naga’s record of profitability, independently audited to comply with requirements of the Hong Kong Stock Exchange, where NagaCop has been listed since 2006, the banks offered a fraction of the funds required at double-digit interest rates. So Dr Chen agreed to fund construction of NagaCity Walk – the shopping area that opened last August – and Naga2 through a convertible bond deal. Last year both additions were turned over the company and the bond value, originally US$369 million, accrued to Dr Chen. Naga 2 is currently undergoing internal fit out and expected to open during the second half of this year.

The bond value, significant as it is, accounts for just a portion of the rise in Dr Chen’s wealth. The bigger picture shows the ongoing success and growth of NagaCorp, where revenue, profits and EBITDA have shown five year compound annual growth rates in the high teens, in contrast to the ups and downs of Macau. Its predominant mainland China play is in the mass market, aided by  deals with China Travel Service and Naga associate Bassaka Air. Naga continues to benefit from and contribute to Cambodia’s growth. It’s a situation that would have been dismissed as lunatic fantasy back on barge in 1995. “You have to give Dr Chen credit,” one associate says. “I wouldn’t have had the cojones [guts] to do what he’s done.”

Hong Kong On Air author Muhammad Cohen is Editor At Large for Inside Asian Gaming