Evolution Capital recently acquired Fico Corporation’s food division. What are your goals with this acquisition?
SINGH: Evolution has been very successful in rolling out the Tune Hotels platform within the region. We have been looking to move in a similar scalable direction with other businesses. Food is very attractive in terms of the growth that Evolution Capital is looking for. Through this acquisition, Evolution Capital will grow the food business in this region, beginning with Thailand, and gradually moving into other Southeast Asian countries. The goal is to grow in both segments, in hospitality with Tune Hotels, and on the food side through Evolution Foods, which has The Coffee Bean & Tea Leaf and Domino’s Pizza.
What is your current business mix? What lines are showing the most success?
SINGH: Up until the merger, most of the investment was into Red Planet Hotels, and the Tune franchise that Evolution has been very successful in growing. Aside from that, Evolution Capital focused on investment advisory services and asset management. There wasn’t any scalable business. We are now getting into that. From a revenue mix standpoint, there was not much diversification. Going forward, we expect food to be the dominant provider of revenue and growth for the company. In that aspect, we see more and more opportunities to grow the food business.
What is Evolution Capital doing from a marketing standpoint to ensure the rollout of Domino’s Pizza is successful?
SINGH: When we launched the first store on December 31st, 2012, we received about 1,000 orders in the first week alone. We have gotten very positive feedback on social media platforms like Facebook and Instagram. A number of Facebook fans have written very positive comments welcoming us. We are doing everything that we can to satisfy the demand. We’ve had the grand opening of our first store. Many of our regular customers and media came by, asking us about how we plan to grow this entire platform so more and more people can enjoy our pizza. From a marketing point of view, we are going to use traditional, local store marketing strategies. On the digital side, we are rolling out a digital platform that will be available for all of our consumers. That will penetrate the market very quickly.
How do you want people to view the Evolution brand?
SINGH: Evolution’s brands are very successful internationally. They are widely known. There is an immediate connection as far as Domino’s Pizza and The Coffee Bean & Tea Leaf are concerned. The connection is very strong. Evolution, up until this point in time, was a boutique investment management company. The recognition was not very strong. Going forward, we are making a conscious effort to put forth the name of the company and the brands associated with it. We would like the business to be successful, and then the shareholders can enjoy the success of these businesses. It is always good to be associated with these brands. For example, Domino’s Pizza is known as Jubilant Foodworks in India. Not many people know about Jubilant Foodworks outside of India. This company is worth about $3bn. Everyone knows them as Domino’s Pizza though. I think it is too early to talk about how we will be known. We would like people to know that Evolution is the principle behind these brands.
How has Evolution Capital leveraged foreign and institutional investment to grow its businesses?
SINGH: This is something that has been done very successfully in Red Planet Hotels, which started initially as a 100% owned subsidy of Evolution. Over the last two years or so, we have grown the small pool to about $100m of equity. We are in the process of raising it to almost $200m. The Evolution team, led by Simon Gerovich and Mark Reinecke, is constantly in the market meeting with investors to raise money for Red Planet Hotel initiatives. There will be similar exercises for the food business as we grow. It’s very early as far as the food business is concerned. This year we expect both of the brands to have about 25-30 stores. For that, we went to the market recently and raised about $10m. There is strong enthusiasm in the market. At some point in time, we have a requirement for equity divestment in the market. But currently, we don’t see the need for that at this point in time.
In ASEAN, going forward, there will be integration. So we will be looking to establish a footprint in this part of the world. When the opportunity arises, we can grow.
Evolution Capital has a large presence in hospitality throughout Southeast Asia. What markets are you targeting for growth and expansion?
SINGH: For the Tune Hotel franchise, we have been the most successful in the Philippines. We have 5 hotels operating there. There are now 4 in Thailand and 1 in Indonesia. In the next 12 – 18 months, there will be about 24 operating hotels within the region. These three countries are the base of this expansion. There is an expectation that within a period of 3 years, we will have about 86 hotels in the region. We are looking into options in Japan and China, which are growing markets. This is on the Tune Hotels side. There is an equal emphasis on the food side. We have a small investment in The Coffee Bean & Tea Leaf franchise in Cambodia. We are looking into expanding that. We are in discussions with our partners for other regional opportunities. In ASEAN, going forward, there will be integration. So we will be looking to establish a footprint in this part of the world. When the opportunity arises, we can grow.
How has Evolution Capital’s restructuring affected its share price?
SINGH: The share price’s reflection of this merger has been phenomenal. Prior to the merger, the share price was around book value. But in the last 2-3 months, there has been a constant upswing in the share price. At times it has been ahead of the general growth that has taken place. We are happy with the share price. We believe that over a long period of time, as more and more businesses are established on the food side, the share price will be reflective of this. Our target is certainly much higher than what it is right now. Evolution Capital has a very enthusiastic management team. We are looking forward to growing our businesses. We expect the market to take note of our businesses. We have established a team of young professionals who have experience running this business. We want to become a large player in the food industry, and provide these experiences through our brands. There is a lot of enthusiasm around Domino’s Pizza. Some of the brands that we have established ourselves, such as Mr. Jones’ Orphanage and Iron Fairies, have been enthusiastically welcomed by consumers. We have 2 Mr. Jones’ Orphanages's currently, but every day we receive requests from various landlords for these brands. Our desire is to grow our brands within the region. There have been inquiries from North America, Japan, and Korea. Over the next 12 months, we will explore these possibilities. Both the branded aspects of the business, and what belongs to us, will provide a very solid platform for the company. We are very excited.