Birmingham City and Hong Kong: a tale of two cities

Birmingham City and Hong Kong: a tale of two cities.

Sort of.

The recent news that a Hong Kong businessman is buying what looks like a controlling stake in the UK’s Birmingham City Football Club piqued Mister Bijou’s interest.

There’s plenty to read out there already: Try googling Birmingham City FC, Carson Yeung, Yeung Ka-Sing, Carson Yeung Ka-Sing. Or do a search of the guardian website.

Anyway, sifting through the news reports some facts emerge.

Firstly, Yeung has put up a £1.09m non-refundable deposit through Grandtop International Holdings Limited to buy into Birminghman City FC. For a bit more on Grandtop, see below.

Secondly, Yeung has until 16 July to come up with a further £15m. At that point, if he comes up with that cash he will then be the largest single shareholder with 29.9% of the Blues. He will need to get his hands on a further £50m to buy the club lock, stock and barrel.

None of the above is chump change.

So, who is Carson Yeung?

Reports are that he started out a barber. Or ran a chain of hair dressing salons. Take your pick. He's probably in his late forties or early fifties. What is certain is that like so many other ambitious young men, years ago Yeung started punting money on the buying and selling of penny stocks quoted on the Hong Kong Stock Exchange.

In Hong Kong, penny stocks are the only avenue for legal gambling other than the regulated betting on horse races and the lottery. In Hong Kong, penny stocks are the chips in play for casino capitalism for the common man.

Wheeling and dealing, however, Yeung ran afoul of Hong Kong’s financial regulator the Securities and Futures Commission. But the machinery of justice runs slow: it was only in September 2004 that Yeung stood before the court for offences alleged to have taken place during May and July 2001. For details and the feeble SFC’s determination of the case: SFC pdf

Meanwhile, over in Macau, Stanley Ho’s STDM 40-year monopoly on casino gambling in Macau came to an end on 31 December 2001.

Since when the casino gambling industry in Macau has developed in leaps and bounds -- thanks to the ease with which mainland Chinese gamblers can now enter Macau.

As of end June 2007, there are now 26 casinos in operation in Macau, 18 of which are either owned or managed by Ho's reincarnation of STDM, SJM.

Other than those? Hong Kong-financed Galaxy Casino has five venues. Las Vegas-based The Sands has Venetian Macao and Wynn Resorts has Wynn Macau.

(Ho has a finger in the Venetian pie. Hong Kong's Mr Lan Kwai Fong, Allan Zeman, has been a director of Wynn Resorts since 2002.)

Both the American operations are, of course, massive. The MGM/Ho’s daughter Pansy Ho joint venture is yet to open.

Everyone is making money. Huge amounts of money. The Venetian opened in the summer of 2004 and Wynn in the autumn of 2006. The two Las Vegas companies have been so profitable their quarterly results in 2007 now exceed what they take and make in Las Vegas.

As for Yeung, he had clearly amassed enough money to be (reportedly) a part-investor in the Greek Mythology Casino which opened Christmas 2004 at New Century Hotel, Macau. The casino operates on a sub-licence from Stanley Ho’s SJM. So it goes.

And Yeung presumably kept playing the penny stocks (see Grandtop, below).

But football, what about the football? There’s no doubting Yeung’s passion for the game, and the football business.

For about two years until the spring of 2007, Yeung was chairman of a Hong Kong football team, Rangers. Presumably/possibly, Yeung also had/has a financial interest in the Hong Kong football club.

Still chairmanship of Rangers was not without its drama, with accusations by coach Tim Bredbury of interference: goal goal goal

Be that as it may, since public speculation about the Birmingham bid surfaced, Yeung has been mentioned as previously looking at Sheffield Wednesday FC and Reading FC.

That was then. Keeping an eye on the ball: the money is on the Blues.

But why, oh why, make a bid for the Blues through Grandtop International Holdings Ltd? Why not just whip out your credit card and wave it in front of Birmingham City's largest shareholders?

Who knows. But Mister Bijou suspects that knowing the difference is the reason why some people get rich and the rest of us stay poor.

Even so, a small, loss-making apparel sources company which is publicly traded on the Hong Kong Stock Exchange, Grandtop International will be of interest to connoisseurs of "only in Hong Kong".

Grandtop's principal shareholders are Huge Gain Development Limited (was 16.67% -> now 13.89%); Premier Rise Investments Ltd (was 16.67% -> now 13.89%); Ms. Leung Choi Fan (was 3.29 -> now 2.74%). Other public shareholders: was 63.37% -> now 52.81%.

Huge Gain is, by the way, owned by Nerine Trust Company Limited which is the trustee of SB Unit Trust. All the units of SB Unit Trust are held by the family members of Mr. Siu Ban (SB), co-founder of Grandtop International.

As for Premier Rise, that company is incorporated in the British Virgin Islands and wholly owned by Mr. Hui Ho Luek, a substantial shareholder. Source: HKSEC Investor

On 20 June, 2007, Grandtop entered into a Placing Agreement (with Yeung), pursuant to which "the Company conditionally agreed to issue an aggregate of 115,200,000 Placing Shares at a price of HK$0.57 each. Net proceeds of the Placing are estimated to be approximately HK$65,414,000 and will be used for future investments, expansions of the Group's business and as general working capital of the Group".

That sum currently converts to about £4,154,103.35.

A week later, on 27 June, 2007, Grandtop announced it had entered into a "binding MOU [memorandum of understanding] with the Vendors whereby the Vendors have granted the Company the right to purchase an aggregate 29.90% of the issued capital of Birmingham City Plc. from them or their nominees for an aggregate price of £14,950,029 (approximately HK$233,220,000).

Oh, and Grandtop is moving its office from grimy Sham Shui Po, Kowloon, to the lightness, convenience and suitably numerologically upbeat Unit 3008, 30/F, West Tower, Shun Tak Centre, Central, Hong Kong.

And Carson Yeung?

His play on the Blues . . . he did in part by running approximately HK$65,414,000 to Grandtop International through Great Luck Management Limited, a company incorporated in the British Virgin Islands and wholly owned by Carson Yeung Ka-sing.

Update: see this follow-up posting