We had the opportunity to catch up with Lotus-Renault GP owner Genii Capital’s Gerard Lopez recently. Lopez was quite open to reveal some details on what’s the whole deal with Group Lotus, Proton and Genii Capital, especially with regards to the working relationship between Group Lotus and Genii Capital, as well as Genii Capital working to open doors with Proton in certain markets. Lopez also shares his feelings about the whole Group Lotus versus Team Lotus court case that’s to be heard in March this year. Enjoy the interview.
What is Lotus’ involvement, in terms of funding for this project and how long is it?
It’s a 7-year sponsoring agreement. And as would be the case with any sponsorship agreement, we wouldn’t disclose a number. It’s a 7-year program for Lotus, that is on one hand the sponsoring agreement, and on the other hand a technical collaboration agreement.
And then the last one which is not spoken about in the newspapers at all is the fact that the team is owned by Genii Capital, which we own, and we have an agreement with Proton and are working a number of things with them, including opening certain geographies in terms of platform, like Russia for instance. It’s not a one variable equation.
When you say the team is owned by Genii Capital in terms of shareholding structure, what’s the breakdown then?
In terms of shareholding structure today, it’s Genii Capital with Lotus having an option to buy into the team in different tranches. Right now, it’s Genii Capital 100% with Lotus having the option to take over 50% at some point in time.
And the option is for how long?
I believe two years.
When did you buy into F1?
About little over a year ago. A year and two months.
Besides F1, are you involved in any other sporting activities?
Not to the level of F1. We have a foundation that helps out with children playing soccer. But yeah, in sports this is our main thing.
So your focus is now Formula 1?
In sports, yes. But Formula 1 is one out of 34 companies in Genii, and it goes from Solar Energy, brake manufacturing, engine manufacturing, real estate, clean tech, funding clean tech, so it’s much broader. This Formula 1 team you see here is one company out of many companies in different areas that we have at Genii Capital.
So you’re basically a private equity fund?
A private equity fund would be what our sister company Mangrove is, that is you invest other people’s money. Genii Capital is our own, we own Genii Capital 100 percent. There’s no outside investors.
And how many people own Genii Capital?
Two. Myself and Eric Lux. We are based in Luxembourg.
Are you trying to dispose all of your shares in the team?
No, unlike a normal investment, this is not one we expect to sell to make a profit. This is one that is used through a certain strategy we have for some of our companies to use it for their promotions. So for us, it is important to own it.
If you were to talk about making money, we will probably make more money over the long term using it as a platform to invite people, meet people, and do deals than we would make by just by buying and selling the team. There’s certainly a long term intent.
So you prefer to be a major controller of the company?
You know the things that we do, there’s only two ways for us to do it, completely or not at all, right? We decided to do this with Lotus, because we know the people well, we know the people at Proton and we feel comfortable that we can share the responsibilities, the management so on, going forward.
If it was a question of who is in charge and who’s not, we would not have accepted any deal with Lotus. It’s a good partnership, but a lot of people do not realise it because Formula 1 has this tendency of overshadowing things. It’s a partnership that goes way beyond Formula 1. We’re partners with Lotus now, looking at brakes system, engine systems. We’re working with Proton looking at new ways to lease cars, finance cars, and looking at the Russian market. We’re working with Renault-Nissan looking at electric cars.
Formula 1 just happens to be one portion of a relationship that is much wider. And certainly not the most, I know there was a question about finances, but certainly a small piece in that big picture in terms of overall discussions.
How are you going to help Proton venture into Russian market? What are you planning?
I won’t disclose what is being discussed in detail, but let’s put it this way, there’s the Russian markets, and there’s other markets where Proton could be provider of platforms for sensibly priced cars to existing brands in those countries. So that’s one of the things that is being worked on. And we have excellent relationships with Russia.
So you looking at the Russian market for the time being?
Yes, that and other markets where we have relationships, but the Russian market is a market of over 160 million people who are now in the situation where a lot of them are buying their first new car now, so there’s a lot of organic growth, unlike other markets, like the UK for instance, where people already have two or three cars and are certainly not buying their first car. So it’s a market that everybody wants, but it requires affordable cars.
When do you expect that Proton will be able to enter Russia?
I think we’re going to start serious discussions sometime in spring this year. These things take time, so you won’t be seeing a Proton manufactured car in Russia in 2011, but from then on, we don’t know. I mean, we’re really dipping the toe in the water now.
What do you feel about this whole tie-up in general?
We decided to go for a relationship with Lotus because we have interests outside of Formula 1. If we wanted to have a relationship with pure sponsor just based on cash, there are other companies out there. For us, we love racing, but we also have businesses that need relationships, and we’re excited to tie up with Malaysians. So we will be going to Malaysia, looking at what business opportunities are to be found.
At the end of the day, we are ranked every month, I believe, as one of the top 10 technology investment companies worldwide. We understand that the Malaysian government has an agenda to try to position Malaysia as a technology hub. So now that we have this relationship, we’re going to move it one step further, try to talk to the government, go and see what it is we can do.
So for us to look at this purely as Lotus-Renault Formula 1 would have been a mistake. That’s why we took quite a bit of time to discuss. It was not the Formula 1 aspect we discussing, but we took time to discuss what else can we do together and how do we do it. That’s how we ended up having a program that was more complete.
But I can’t hide the fact that I’m excited about the whole Lotus deal. I’m sure as journalists you guys can Google for this – there’s an article on an interview that I gave about 10 years ago when I was asked what I bought with my first pocket money? The article has been out there since 2001 – the first thing I ever bought with my pocket money was a Lotus black and gold Formula 1 car toy.
Any plans for you to go into Lotus, because currently they are looking for funds for their turnaround plan.
I think they have a good shareholder with Proton. for sure, that is something also that we will be looking at, but it’s not anything that is urgent.
You will not rule out that possibility right now?
No, I wouldn’t rule it out. I never rule anything out.
What are your comments on the trademark dispute between 1Malaysia Racing Team and Group Lotus?
I’m a pretty pragmatic person, for me it’s quite simple. Mr Chapman who founded Lotus, is no longer among us. He has a son, Clive Chapman. And all I can say is that there is no way we could say that we are the Formula 1 team that used to belong to Mr Chapman. And with all due respect Tony and his team, there is no way they could say the same thing.
I mean, none of them could say that. You know I am not Mr Chapman’s son and neither is Mr Boullier, and neither is Danny Bahar. And Tony Fernandes as far as I know, is also not Mr Chapman’s son or family. I don’t think any of us can say that we have any link to the heritage of that. The only difference is – and that’s why I have a very pragmatic approach to this – the only difference is that Group Lotus has decided to promote itself in Formula 1 and has absolutely every right to do so. They are called Lotus, they make Lotus cars, and that’s it. They are a car manufacturer.
So we’re not saying “oh we’re continuity of Mr Chapman’s team”, all we’re saying is that Group Lotus is a partner of ours, wanting to promote their car brand in Formula 1. What Mr Fernandes is saying, as far as what I can read from the press, is that they are the spiritual successor to Team Lotus.
And honestly, it doesn’t make sense. I know they will lose money if they change their name. So I understand the struggle that they have to give up on this. And being pragmatic if I was in his position, would I do the same thing? I have no idea. For sure they stand to lose money, but that doesn’t make it legit to say that they are Team Lotus. Because we are not and they are not.
We are Lotus Renault GP, which represents among other things the Lotus Car company, who wants to sell Lotus cars. And that’s it end of story. 1Malaysia Racing is not the Lotus Car company, and it’s also not the Lotus of Mr Chapman.
And that’s why the Chapman family made a statement not that long ago. Because they were actually supportive of what they were doing up until a certain time, and they became unsupportive when things got skewed. And when they decided to go from Lotus Racing to Team Lotus essentially becoming what they never were, which was the extension of Mr Chapman’s family heritage and so on. I think the family didn’t take that too well.
So we have a very clear opinion. Which is absolutely nothing to do with the position of the court, but it’s just a pragmatic approach on what this team does, and this team represents Group Lotus, the car manufacturer wanting to promote itself in Formula 1. And that’s it. End of story.
So it doesn’t matter what the court decides? As far as you’re concerned?
I think it matters to the other side. And you know, it’s pretty sad when you have a brand like Lotus and when you even have to go to court to decide who’s Lotus, when at the end of the day, you only have one Lotus company worldwide, and that’s the one that is owned by Proton. That’s what I find sort of odd, such is the system.
Is there any way this could be resolved before it goes to trial?
I don’t know, unfortunately or maybe fortunately, we’re not linked to the issue right? We don’t own Lotus, we’re not Mr Fernandes. I think I would say that from our side, and certainly from the side of Proton and Group Lotus, everything has been done not to publicly comment on this.
Even with what I said now, I don’t think you’ll ever be able to say I’ve criticized the team. I think it’s been the exact opposite on the other side. So I don’t know if too many bridges have been burnt. I know for instance there was an interest from Proton to actually try to resolve it.
But you’re okay with there being two Lotus teams?
I’m okay because I have no choice. If you were to ask me if I had a choice would I be okay? No, I’m not okay. I think it’s a dilution of the brand, I think it’s bad for the brand, and as I’ve said, because I’m very pragmatic, I don’t need to be a lawyer to explain why there’s only one Lotus.
So to me, there’s only one Lotus and that’s it. End of story. Everything else is just a discussion on a name to avoid losing money, if they have to choose. So yeah I’m not okay with it, but at the end of the day I’m not the one who has the say.
Do you look at this as positive publicity instead of negative publicity, you that have four Lotus racecars on the grid?
You know, some people might say that. I don’t know. I don’t look at it that way. I don’t think it’s necessary bad. I don’t think it’s horrible. For sure, for Lotus as a car brand it’s not that bad. I don’t think it does Lotus as a car brand any good if they intend to compete with Ferrari if their cars qualify 18th or 19th.
At the end of the day, only hardcore fans care about the car that’s running 18th. If you’re not a hardcore fan of a team that’s not competing in the top, it’s likely you won’t be able to tell me who finished even 10th in the race. Nobody knows, because nobody cares. So either you’re at the top, or people won’t talk about you.
So if the relationship that Lotus has with us is one about promoting the car brand, I think their decision was right, which is not to be in Formula 1 at all or to be in Formula 1 and be able to race at the top. So I don’t think it’s necessarily a horrible thing to have four cars called Lotus, but I don’t think it’s a good thing either. It’s neutral at best and for sure it doesn’t do anything for the brand in terms of promoting it.
And that’s one of the reasons I believe that Proton decided to terminate the agreement. And again I say that, knowing how difficult it is to build a team from scratch, and knowing that they didn’t do a bad job as a new team. But if you’ve been able to visit their factory and compare it to ours, I don’t know if you can imagine the time it will take to built something like this and the amount of money it takes.
There is about 20 years invested in creating what the team is today. With every year, as I said, loads of money is invested in the factory. You just don’t come from nothing and build something like this. So I respect what they’ve done in building their own. But if Lotus wants to be at the top, there’s no way they could have tied up and kept with it. Because it would have taken ages and probably never would have been able to catch up.
It’s an unfortunate circumstance which is that if you’re at the top, you’ll get more sponsor money and more TV money so you can invest more. So how do you ever catch up?. You’re always playing catch up.
That brings me to my last question, how confident are you that Lotus Renault team will do well this year?
I predict that we will be winning races this year. So I’m very confident.
