Chow brothers buy listed company RIS Group
Wellington property magnates the Chow brothers have bought a listed shell company, RIS Group, to list their $200m portfolio.
The brothers, who have made an estimated $75 million fortune from brothels, hotels and commercial property deals, currently manage an 18-strong property portfolio valued over $200m which includes The Mermaid strip club and Capital Market food court in Wellington.
John and Michael Chow announced on Monday they launched a reverse takeover bid for the company.
John Chow said it would pave the way for Chow Group to "back-door list our quickly expanding property holdings".
The brothers were committed to growing their property investments and going public with their property portfolio was a natural step for their expansion plans, Chow said.
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In a statement, RIS Group chairman Roger Bennett said the board accept a conditional offer from trusts associated with John and Michael Chow on Sunday.
Under the agreement, RIS agreed to buy the shares in 16 Park Ave – a refurbished Auckland hotel – for $7 million. In turn, the brothers will hold 90 per cent of the ordinary shares in RIS.
"This is a very exciting development," Bennett said.
"The RIS directors have worked hard to restructure the shell, so that it would be attractive to a potential listing candidate.
"We have had a number of people making general inquiries, however the agreement comes as a result of the first offer that has been made".
The board was positive about the agreement, he said.
"The Chow brothers have been very successful businessmen who have built a very significant portfolio. The directors are looking forward to working with them on this transaction."
John Chow said they had plans for further expansion into the accommodation and hotel markets in New Zealand.
Last month, the brothers announced they bought the Zen Building in Rotorua from an Auckland property investor to turn it into a 150-room hotel with a 4-star rating.
"We are on this ride to make money but not at the expense of buildings that don't add value to the community for the long term."
The brothers enjoyed turning "tired, unprofitable buildings" into revamped properties they were proud to hold for long-term returns, he said.
"We don't expect it to be a bumpy ride but we do expect good returns for investors."
The agreement is subject to the Chow brothers undertaking further due diligence on RIS Group and getting consent from their bankers. RIS Group also need to obtain necessary approvals.
In April, RIS Group was fined $80,000 and censured by the NZX for missing the deadline to file its 2014 annual report.