VOF eats into Pho 24 chain

Cooking up profits: VOF has bought a 24 per cent share of Pho 24’s successful restaurant business

The investment comes at the conclusion of successful negotiations for years between VOF’s fund management arm VinaCapital and the Nam An family shareholders, according to Kelvin Lee, VinaCapital’s managing director.
Lee, who also led negotiations, said VOF would invest around $3-$4 million in Pho 24 in the initial stage, depending on the company growth.
The capital investment is to fund Pho 24’s scheme to multiply the business model over the next two years, including establishment of a noodle factory and a central kitchen to produce noodle and cooking ingredients to supply domestic outlets and support its international franchising plans.
“The investment [by VOF] is not just about capital – it’s a catalyst to transform the family-owned company into a corporation with systems and processes capable of managing, supporting and sustaining stores in Vietnam, with a strong presence overseas,” he said.
Horst Geicke, chairman of VinaCapital, said his firm saw tremendous opportunities in the consumer-food service market as demand for fast and convenient meals in a comfortable and hygienic environment continues to grow rapidly.
“Our investment in Pho 24 is another addition to VOF’s food and beverage portfolio of investments, but it is the most unique and demonstrates VOF’s commitment to expansion of promising and fast-growing Vietnamese companies,” he said.
Ly Quy Trung, CEO of Nam An Group which owns the Pho 24 restaurant chain, added that the business partnership with VinaCapital “means we can focus on managing and increasing the profitability of all our stores”.
“We think we have a strong financial partner that can help create added value for shareholders through financial discipline and smart corporate finance ideas,” he added.
Initiated by the Ho Chi Minh City-based Nam An Group, the first Pho 24 restaurant was opened in 2003. Pho 24 stands for the 24 different spices and ingredients that are used to produce the final broth, which must simmer together for 24 hours before serving. The name also implies pho is served 24 hours per day and is priced at VND24,000 ($1.5) a bowl.
The chain marks an unofficial record – being the pho sector’s fastest-growing brand in Vietnam. In three years around 40 Vietnamese restaurants have been commissioned, and three outlets in Indonesia and the Philippines have been franchised. The figure is expected to rise to 100 over the next two years.
All the restaurants are decorated in the minimalist East Asian style usually seen in Japanese and Korean restaurants, which creates a feeling of elegance and cleanliness. The broth’s recipe is kept exactly the same at every Pho 24 – regardless of the chef’s origins.
Nam An Group chief says franchising is the goal Nam An has for its Pho 24 chain, especially overseas, unveiling that the restaurant has completed final preparations for launching the first Pho 24 in the Republic of Korea next December and in Japan in March 2007.
Managed by VinaCapital, VOF is a close-ended investment fund listed on the second board of the London stock exchange. The fund now has a capital size of nearly $200 million, with investors in the US, Europe, and Asia being the leading institutions.




No. 779/September 18-24, 2006