The Jumbo Group restaurant chain launched its initial public offering (IPO) yesterday as it bids to raise about $40 million to expand in Shanghai and lift productivity here.
There are 88,233,000 shares in the IPO priced at 25 cents apiece - two million for the public tranche and the rest as placement shares.
A further 72,100,000 shares have been subscribed at the same price by two cornerstone investors - Osim chief executive Ron Sim and Orchid 1 Investments, a unit controlled by Temasek Holdings unit Heliconia Capital.
The IPO, which aims to raise $40.08 million, closes at noon on Nov 5, with trading of Jumbo's shares expected to commence on the Catalist board at 9am on Nov 9.
The firm, best known for its Jumbo Seafood restaurants, also operates the brands Ng Ah Sio Bak Kut Teh, J Café, Chui Huay Lim Teochew Cuisine and JPOT.
It has 14 outlets here and two in Shanghai across the five brands.
Jumbo intends to use the IPO funds to open at least four new outlets over the next 24 months, with a focus on China, said chief executive Ang Kiam Meng yesterday.
The plan is already in motion, with Shanghai due to get its third Jumbo outlet in January.
"Our growth in China has translated to a 93.8 per cent rise in the country's revenue from $2.4 million in the first half of 2014 to $4.6 million in the first half this year," he said, adding that spending per head in China is at around $70 compared with Singapore's $60.
Jumbo Seafood sells about 1.4 tonnes of crab a day at its restaurants here.
The strong performance of its domestic and overseas franchises has led to a compound annual growth rate of 34.2 per cent between 2012 and 2014. Net profit for the first half this year was $7 million.
Jumbo's outlet expansion here will be more selective given the saturated market, but it intends to invest in its back-end facilities.
"We are planning to acquire new premises, equipment and machinery for our corporate headquarters, central kitchen and R&D kitchen," Mr Ang said.
Jumbo's 10,000 sq ft central kitchen in Kaki Bukit prepares the sauce for its popular crab dishes. The facility is one of Jumbo's competitive strengths and helps the company achieve greater cost and manpower efficiency, Mr Ang said.
Meanwhile, Jumbo is not worried that the economic slowdown and anti-corruption policies in China will rock its business. The impact has already been felt by luxury brands and gaming businesses in the region.
Mr Ang said: "We continue to position ourselves as a mass-market brand that targets the middle-class consumers. Our market share should remain stable despite the economic downturn and the cut in luxury spending."
Jumbo's directors intend to recommend annual dividends of no less than 30 per cent of the net profits for the financial years ending on Sept 30 in 2016 and 2017.