When Lawrence Ho transferred 26.44 million shares in Melco Resorts & Entertainment to an irrevocable trust on 16 September, the transaction looked straightforward.

The shares represented roughly 2.2% of the casino operator. The transfer involved no payment, and a US filing described it as part of “generational wealth planning”. Ho remained the controlling shareholder.

But the transaction becomes more interesting when viewed from the other direction: how does Lawrence Ho actually control Melco Resorts?

The answer is considerably more complicated than his personal shareholding — and illustrates how control of one of Macao's largest casino groups sits inside a network of listed companies, corporate vehicles and family trusts.

Before the September transfer, Ho's beneficial ownership of Melco Resorts was approximately 58.5%. Afterwards, it fell to around 56.3%.

That sounds like Ho personally owns more than half of the US-listed casino operator. He does not.

The overwhelming majority — 687.36 million Melco Resorts shares — is held by Melco Leisure and Entertainment Group, representing approximately 56.3% of the company.

Melco Leisure is, in turn, wholly owned by Hong Kong-listed Melco International Development.

And that is where Ho's control becomes more interesting.

Public disclosures earlier this year attributed Ho an interest in approximately 61% of Melco International. Yet only a small portion of that position was held by Ho personally. Most of the interest attributed to him ran through entities including Better Joy Overseas, Lasting Legend, Mighty Dragon Developments, Black Spade and L3G Holdings.

Some of those holdings are themselves connected to discretionary family trusts whose beneficiaries include Ho and members of his family.

In other words, the ownership chain is less:

Lawrence Ho → Melco Resorts

and more:

Lawrence Ho and family structures → Melco International → Melco Leisure → Melco Resorts

That distinction matters because the September transaction did not disturb the central link in that chain.

The 26.44 million shares transferred in September came partly from Ho's direct holdings and partly from Black Spade Capital.

Following the transaction, his remaining direct Melco Resorts position consists largely of restricted shares that have not yet vested.

What has changed, therefore, is where a portion of Ho's economic interest sits. What has not changed is the corporate block through which control of Melco Resorts is exercised.

That makes the description of the transaction as generational wealth planning significant.

Trusts are not new to the Melco ownership structure. Earlier disclosures already showed family trusts sitting behind substantial interests attributed to Ho at the Melco International level.

The latest transaction appears to extend that approach further into Ho's personally held Melco Resorts shares.

It would be premature to interpret that as a formal succession plan. The filing does not say that, and Ho, 49, remains chairman and chief executive of Melco Resorts as well as chairman and chief executive of Melco International.

But it does show that the separation between personal ownership, family wealth and corporate control is becoming increasingly important to understanding who owns Melco.

The structure ultimately controls considerably more than a collection of Macao casinos.

Melco Resorts operates City of Dreams, Studio City and Altira in Macao, alongside City of Dreams Mediterranean in Cyprus and City of Dreams Manila in the Philippines, while expanding its presence through City of Dreams Sri Lanka.

The group is therefore becoming geographically broader at the same time that the ownership surrounding its founder is being increasingly structured through corporate and trust vehicles.

Those two developments should not be presented as causally connected: there is no public evidence that the September transfer was motivated by Melco's international strategy.

But together they make the ownership architecture increasingly relevant.

The important development is not that Lawrence Ho has relinquished control of Melco. He has not.

It is that control and personal ownership are becoming progressively less synonymous.

For investors and the gaming industry, that distinction will matter whenever the question eventually shifts from how Lawrence Ho controls Melco today to how that control is transferred tomorrow.

We track how money, players and regulation move across East Asia's gaming markets — including the parts that don't show up in the official figures. If that's your world, reply. The best context usually comes from comparing notes.

—

East Asia Reports
Web: eastasiareports.com · Email: [email protected]
Author — Adrià Mas Rodríguez