Revenue Valley in talks with potential new investors

KUALA LUMPUR: Revenue Valley Sdn Bhd, which operates popular casual dining restaurants such as The Manhattan Fish Market (MFM),Tony Roma’s and NY Steak Shack in Malaysia, Singapore and Thailand, is in talks with several investors in a bid to bring in like-minded organisations with the anticipated exit of its 85.76% shareholder Ekuiti Nasional Bhd (Ekuinas) from the food & beverage (F&B) portfolio.

Ekuinas has in the last few years sold its F&B assets, including Burger King and San Francisco Coffee, abandoning plans to create a food group because significant additional investment and operational involvement were required to achieve profitability.
Revenue Valley group CEO George Ang (pix) opined that the government-linked private equity fund is unlikely to get into a long-term marriage with its investee companies, as Ekuinas’ investment period usually spans some five to seven years and that the funds need to be cashed out at a certain time.
Revenue Valley was founded in 2002 by Ang and Dickson Low, who remain as minority shareholders.
“In fact, this year could be the year that they (Ekuinas) would try to exit all their F&B business. I’ll get a new partner, a new shareholder to work with. If we can work with Ekuinas, we can work with most other parties well,” Ang told SunBiz in an interview.
He declined to reveal any further details on its search for a new partner.
The group which operates 120 restaurants across the region, registered a net profit of RM11.9 million on revenue of RM278.5 million in 2016.
He said the new partner can take over Ekuinas’ stake, or even 100% of Revenue Valley as he is willing to explore both opportunities.
“We’ve built this company for the last 15 years, and we’ve built a team that is strong to run it. If it’s a company that wants to buy the whole group, we’re okay. If it’s a good partner that will put in more money for us to grow, we’re also okay to keep our stake there to grow together. It depends a lot on who’s the new partner,” Ang said.
He added that this is Revenue Valley’s fifth year with Ekuinas since the latter bought into the company in 2012. The divestment of Ekuinas’ stake in Revenue Valley can happen any time now until the end of 2018.
“Ekuinas has been more of a financial partner rather than a strategic partner. They put in money, they don’t get their hands dirty with you. They will have a monthly meeting on the results and they don’t get into operational details with me. It’s been a good alignment in that way. I take care of the business, the operational part, the negotiations. They will guide us based on the financial KPIs,” Ang said.
He said it is looking for same thing in the new partner, essentially a party with strong financial muscle.
“If a new partner comes in, they are buying a good ship, not a ship that is in need of repair. They should trust the management and grow the business.”
Over the last five years with Ekuinas, he said, Revenue Valley has grown from a RM80 million revenue company to over three times that.
Today, Revenue Valley has six brands under its coffers. It has three homegrown brands MFM, NY Steak Shack and Nice Catch; as well as being the franchisee for Tony Roma’s, Popeye’s Louisiana Kitchen (in Singapore) and TR Fire Grill.
Ang said it is targeting a 10% growth in revenue this year to cross the RM300 million mark, mainly driven by MFM, which currently contributes 60% to its revenue.
About 65% of the company’s income is in foreign-denominated currency, exceeding its ringgit income. The foreign currency comes from Thailand, Singapore, as well as franchise royalties in US dollars. It runs the MFM franchise in 14 countries and is in talks to open in new markets like the Philippines, Vietnam, Kuwait and Bahrain. It will also begin franchising NY Steak Shack this year, starting with Sabah and Sarawak.

Locally, it will continue to open more MFM outlets in the next few years outside the Klang Valley. There are currently 80 MFM outlets in Malaysia.
Ang said sales have been stagnating due to external factors, poor consumer sentiment, slowdown in spending, coupled with the weak ringgit that saw the cost of imports rise. Despite these, Ang said most of its restaurants are still profitable.
“We look to expand our seafood casual dining restaurants (MFM, Nice Catch) faster as they cater to the middle to upper-middle market; compared with Tony Roma’s and TR Fire Grill that are at the higher end of the market.
“At the fast casual dining space, where MFM and NY Steak Shack are, we see the market growing faster than the upper market category as the economy slows down,” Ang said.