Ever­stone Shows Ap­petite for Piz­zas

PE firm’s arm F&B Asia Ven­tures picks up 51% con­trol­ling stake in In­done­sian fran­chise of Domino’s Pizza for $20 mil­lion

The Economic Times - - Business Of Brands - ARI­JIT BAR­MAN

Af­ter wine, cof­fee, burg­ers and gelato, it’s now time to turn to piz­zas for mar­que pri­vate eq­uity in­vestors Ever­stone Cap­i­tal. The seven-year-old In­dia and South East Asia fo­cused fund with $2 bil­lion of as­sets cur­rently un­der man­age­ment, has taken a big bite of Domino’s Pizza’s in In­done­sia by pick­ing up a con­trol­ling 51% stake in their lo­cal fran­chise, PT Dom Pizza In­done­sia, for $20 mil­lion, said people aware of the de­vel­op­ment. Ever­stone’s arm, F&B Asia Ven­tures, which spe­cialises in cre­at­ing a port­fo­lio of food and bev­er­age brands and as­sets across South Asia and In­dia, will be the ve­hi­cle for this new in­vest­ment. The com­pany will use the money to ex­pand its ex­ist­ing op­er­a­tions of 60 branded pizza out­lets in six In­done­sian cities, in­clud­ing Jakarta and Bali. Ever­stone was started in 2006 by for­mer Gold­man Sachs bankers Atul Ka­pur and Sameer Sain. Leading lo­cal re­tailer Mi­tra Adi- perkasa (MAP) will con­tinue to own the resid­ual 49% stake in the joint ven­ture. MAP, the largest re­tailer in In­done­sia with over 1,800 stores in 59 cities, owns de­part­men­tal stores, food and bev­er­age chains and has a unique fran­chisee port­fo­lio of over 150 global fash­ion and life­style brands like Zara, Marks & Spencer and Star­bucks and dis­trib­utes Wil­son, Speedo and Barbie. An email query to Ever­stone spokesper­son went unan­swered till the time of go­ing to press. This in­vest­ment is in sync with Ever­stone’s over­ar­ch­ing con­sumer the­sis — in­clud­ing ed­u­ca­tion, health­care, fi­nan­cial ser­vices and lo­gis­tics — and es­pe­cially its long-term fo­cus on the hugely ex­pand­ing F&B space in the re­gion. It re­cently brought Burger King to In­dia and also owns the lo­cal fran­chise for the pop­u­lar chain Cof­fee Bean & Tea Leaf. In 2012, it ac­quired Singa-

PT Dom Pizza to use funds to ex­pand its ex­ist­ing op­er­a­tions of 60 branded pizza out­lets in six In­done­sian cities

pore-based pubs and restaurants op­er­a­tor Harry’s Hold­ing, own­ers of the epony­mous chain of bars. With such a fo­cused strat­egy, it cre­ated an in­vest­ment hold­ing com­pany F&B Asia Ven­tures to build a pan-Asian food and bev­er­age plat­form with as­sets across mul­ti­ple cuisines, ge­ogra­phies and for­mats. The com­pany is fo­cused on ex­pan­sion of brands via or­ganic and in­or­ganic routes, through bolt-on ac­qui­si­tions and fran­chise mod­els for fran­chis­ing brands in other South­East Asian coun­tries. While Ever­stone owns 75% in it, Ver­lin­vest SA, a Bel­gian fam­ily of­fice, owns 25%. “Quick ser­vice restau­rant plat­forms are get­ting much bet­ter val­u­a­tions than ca­sual din­ing since they can be eas­ily scaled up. On the back of their good eco­nom­ics, these can also be taken to mar­ket eas­ily,” says Deepesh Garg, MD, o3 Cap­i­tal, a bou­tique in­vest­ment bank. Even though In­dia re­mains its main mar­ket, there's sim­i­lar­ity be­tween the do­mes­tic mar­ket and that of In­done­sia. “Like In­dia, In­done­sia too has a huge pop­u­la­tion and a spend­ing mid­dle class. On a large con­sump­tion base, food is a big theme and in­ter­est­ingly piz­zas as a cat­e­gory has made big in­roads al­ready,” said an an­a­lyst fa­mil­iar with the mar­ket. An­a­lysts feel the Ever­stone in­vest­ment will help Domino’s catch up with other global ri­vals like KFC and McDon­ald’s that dom­i­nate the fast food chains in In­done­sia.

“With the ad­di­tion of more out­lets, com­pe­ti­tion will be­come tougher and most chains are likely to com­pete on Exclusive 25-year mas­ter fran­chise to roll out Burger King in In­dia Pind Baluchi: North In­dian cui­sine restau­rant Harry’s: Pre­mium life­style bars, restaurants and a bou­tique ho­tel in Sin­ga­pore Blue Foods: Multi-for­mat restau­rant chains Duck & Rice: Asian ca­sual din­ing for­mat in In­dia and south­east Asia in a tie-up with restau­ra­teur Alan Yau menu in­no­va­tions,” said a Septem­ber 2013 re­port pre­pared by Euromon­i­tor In­ter­na­tional on the con­sumer food ser­vice busi­ness in In­done­sia. “Be­sides menu in­no­va­tions, fast food oper­a­tors are ex­pected to step up ef­forts to boost sales. The strate­gies may in­clude ag­gres­sive and in­no­va­tive ad­ver­tise­ments and co-brand­ing with banks and mo­bile phone ser­vice oper­a­tors,” it added.

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