Crown recovery drives Packer to $505m profit

The recovery in the share price of Crown Resorts has driven a $505 million net profit for James Packer’s private wealth vehicle.

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from AFR 1.12.21

A recovery in the share price of casino operator Crown Resorts has driven a $505 million net profit for James Packer’s private wealth vehicle.

Consolidated Press Holdings (CPH), which houses Mr Packer’s 37 per cent holding in Crown as well as various properties and other investments, also recorded a near forty-fold increase in revenues to $636 million, in FY21 accounts lodged with the corporate regulator on Tuesday evening.

Nearly $480 million of that revenue was attributed to “fair value gains on financial assets”, driven overwhelmingly by the recovery in Crown’s share price since March. That was when US private equity giant Blackstone lobbed the first of three takeover offers for the beleaguered business, which narrowly avoided having its NSW casino licence torn up in October.

At the close of FY20, a year in which Packer’s private vehicle suffered a $402 million net loss, Crown’s ASX-listed shares were trading around $9.60. By the time the FY21 accounts were being signed off, the shares were up 24 per cent to $11.91.

CPH paid Mr Packer a $111.5 million divided in FY21, down from $127 million the year prior. That was still an impressive result given Crown Resorts did not declare any dividends last financial year, ending a decade-long run which had seen the mogul entitled to about $150 million in annual dividend income from his major asset.

Apart from the revaluation of the Crown shares, the other major item on Crown’s revenue line was “management fees” of $151 million, up from just $1.5 million in FY20.

It is understood these are not related to payments from third parties but from wholly owned CPH subsidiaries. It is unclear exactly what they relate to, but it is known that Mr Packer is placing increasing focus on technology investments.

He was previously a backer of Will Vicars’ Caledonia Private Investments, but his interest in that concentrated tech stockpicker went to sister Gretel in a 2016 estate settlement.

The Square Peg venture capital funds of Paul Bassat, whom Packer first backed in the 1990s with job ads disrupter Seek, are now understood to be his main outlet for new economy plays.

Investments through Square Peg’s funds and co-investments in the likes of Uber and Israeli gig marketplace Fiverr are thought to be increasingly material next to the Crown stake, which Mr Packer has pledged to sell down below 5 per cent in the next five years.

While Mr Packer resigned most of his directorships in 2019 as he battled mental health problems, he remains a director of CPH’s ultimate parent, the Bahamas-domiciled Consolidated Press International Holdings.

The $2.7 billion Crown Resorts stake dominates CPH’s net asset base, which rose from $3.9 billion to $4.4 billion in FY21.

But it also houses a grab-bag of other assets, including a one-third share in the South Sydney Rabbitohs rugby league team, a 40 per cent stake in The Upside, the yoga pants business of first wife, Jodhi Meares, luxury properties in Mexico and Brown Resorts’ Barangaroo complex, and interests in peer-to-peer lender SocietyOne.