Malaysia's Genting builds stake in RankBy Ben Harrington and Iain Dey
Last Updated: 12:45am GMT 02/12/2007

One of Malaysia's richest families has bought a secret stake of more than 10 per cent in Rank, the bingo and casino operator. The shareholding, which was amassed in the past few days, could spark a bidding war for Rank. The UK operator has been tipped as a take­over target ever since a profit warning last month sent its shares crashing to their lowest level in seven years.

An announcement confirming the share purchase by Malaysia's Genting is expected as early as tomorrow morning. News of the stake is expected to flush out other potential bidders such as Harrah's, the Las Vegas-based gaming company, Ladbrokes and William Hill. BIL, the Singaporean company which already owns the Clermont Club, is another potential suitor.

Genting, whose interests span gaming to oil, is no stranger to the British gaming market. The group has gradually built up market share, buying London's high-end casino Maxims, which is in London's Kensington, and casino operator Stanley Leisure for around £700m last year.

Industry sources said last night Genting could be interested in merging its existing British casino operations with Rank's Grosvenor Casinos business.

However, the company has in the past also been prepared to buy large stakes in public companies and use them as bargaining chips in takeover situations. Genting bought a 28 per cent stake in London Clubs International (LCI) before it was approached last year by Harrah's.

The Malaysian conglomerate was founded by Lim Goh Tong, a self-made billionaire who died earlier this year. Born in China's Fujian province in 1918, Lim migrated to British-ruled Malaya in the late 1930s.

The entrepreneur made his first fortune in post-war Malaya by trading secondhand machinery for the country's tin mines and plantations. In the 1960s Lim decided to invest his entire fortune in developing a gaming resort in the mountains outside Malaysia's capital Kuala Lumpur.
He named the resort Genting, which means "on top of the clouds" and it now attracts gamblers from all over south-east Asia. On average 18m people visit the resort every year and its success has made him one of Asia's richest men.

Despite his wealth, Lim maintained a simple lifestyle and managed his companies in the manner of a traditional Chinese patriarch. The company is now run by his son, Lim Kok Thay, who is chairman, and Justin Leong, Lim's grandson who is head of strategic investments & corporate affairs.

Leong, who is in his late 20s, went to university in Oxford and is an old Harrovian. The young executive is believed to have been responsible for Genting's previous investments in Britain, although it is not clear whether he is behind the company's decision to buy a stake in Rank.

The Sunday Telegraph last week revealed that Rank recently rebuffed a proposal from Harrah's. Under the proposal, Harrah's would have injected its subsidiary LCI into Rank in return for a stake of around 28 per cent. Industry sources close to the situation said Harrah's and its new private equity backers, TPG and Apollo, could come back with another proposal.
Leisure and gaming groups such as Rank have had a difficult time of late as tougher legislation, in particular the smoking ban, has hit profits.

On Friday, Rank's shares closed at 100p, valuing the company at around £392m. However, analysts at City broker Evolution believe that if the company's profits were to recover it could be worth at least 175p a share within the next year and as much as 301p a share in two years.
Rank declined to comment.