SINGAPORE - Singapore-based Zouk Group is forging ahead with global expansion plans even as it faces a challenging business environment and a future without the backing of the Genting group.
Zouk's operations and business direction will remain unchanged under the new management, and there will be no layoffs, the group's chief executive, Mr Andrew Li, told The Straits Times on Wednesday (Sept 2).
The $14 million management buyout, announced on Tuesday, is a personal investment by Mr Lim Keong Hui, a Genting scion, to support the growth of the lifestyle group he helped to create and ease Genting Hong Kong's cash crunch, Mr Li said.
Mr Lim, who is the son of Genting group chairman Lim Kok Thay, stepped down from the board of ailing cruise operator Genting Hong Kong last week. He is the sole owner of Malaysian firm Tulipa, the buyer in the cash deal.
"Given the challenges Genting Hong Kong is facing during the pandemic, we thought it would make more sense to take Zouk out since it's not a core asset, and continue to build the brand," Mr Li said.
Plans are in the works to expand the Zouk brand and grow its headcount, which currently stands at about 300. Details on new projects will be announced in the coming months, he said.
Mr Li will continue to steer the ship as CEO of the Zouk Group, but relinquish his position as vice-president of Genting Hong Kong, which he has held since 2015.
He helped to spearhead the acquisition of home-grown nightclub Zouk that year, and, together with Mr Lim, grew it into a lifestyle group with 17 outlets globally, including the Empire club in Resorts World Genting and the Five Guys burger joint in Singapore.
"It was always our vision to build this global lifestyle platform, and over the last four years we've made huge strides," Mr Li said.
The group must now stand on its own feet, and Mr Li said he is confident that it will be self-sustaining by next year, despite the issues from the Covid-19 pandemic.
As nightclub activities remain banned in Singapore, Zouk has pursued new revenue streams, including a livestreaming tie-up with Lazada, sale of bottled cocktails and the conversion of its Capital lounge into a restaurant.
Transitioning the group to a private company will allow it to be more agile in responding to challenges, Mr Li said, adding that Mr Lim will now be more involved in the business.
Zouk will meanwhile continue its partnerships with Genting on projects related to its resorts and cruise ships.
Mr Lim said in a statement to ST that he is excited to be part of Zouk's evolution into a global hospitality brand, adding that it has built up a dynamic management team over the past five years.
"By pivoting and experimenting during these difficult times, Zouk is able to seek new ways to continuously serve our customers," he said.
Associate Professor Lawrence Loh of the National University of Singapore (NUS) Business School noted that Genting Hong Kong has been badly affected by the pandemic and needs liquidity.
"Any asset that can turn on the cash tap will have to be mobilised," he said.
Genting Hong Kong reported a US$742 million (S$1 billion) net loss for the first half of the year as the fleetwide suspension of voyages since March took its toll.
It owed US$3.4 billion as at July 31, and suspended payments to creditors last month to preserve services critical to the company's operations.
"While the Zouk sale will not be able to solve the large debt problem, the proceeds will buy time for Genting Hong Kong to hold on in terms of working capital," said Prof Loh.
The transaction may also benefit the Zouk Group in the long run, he added.
"Being out of the Genting umbrella, Zouk will be ringfenced from the restructuring, including even possible creditor actions."