Foodcourt operator Koufu has priced its initial public offering (IPO) at 63 cents a share, ahead of a listing on the Singapore Exchange mainboard.
The IPO will raise net proceeds of $70.5 million through the sale of 51.2 million new shares and 45.8 million shares owned by Koufu founder Pang Lim and his wife.
This means that only $43 million of the IPO proceeds will go to the company.
Upon its debut, Koufu will have a market cap of $349.8 million, which is 13 times its 2017 earnings.
The IPO comprises a placement tranche of 90.7 million shares and a public offer of 6.3 million shares.
The public offer closes at noon on July 16, with trading to commence at 9am on July 18.
Koufu was founded by executive chairman and chief executive Pang in 2002. His wife and executive director, Ms Ng Hoon Tien, is a co-founder.
Amount of IPO proceeds that Koufu plans to use to build an integrated facility that is expected to be completed in the second half of 2020.
Percentage of revenue that Koufu derives from outlet and mall management. Last year, it opened one new foodcourt and closed two underperforming ones where losses ran ahead of depreciation.
They will still own 78.7 per cent of Koufu after the IPO, or 75.5 per cent if an over-allotment option is exercised in full. The two have agreed to a six-month lock-up period on their shares. Mr Pang said the response from investors was "not bad".
"Our cash flow has been good and stable, from the first day till now," he said in Mandarin.
Last year, Koufu generated net cash flow of $51 million from operations. Net profit was $26.8 million, up 3.8 per cent from 2016. Revenue was steady at $216.7 million.
Koufu derives 48.6 per cent of its revenue from outlet and mall management. Last year, it opened one new foodcourt and closed two underperforming ones where losses ran ahead of depreciation. It was also unsuccessful in renewing the tender for another outlet. Mr Pang said: "Over 16 years, the foodcourts we've closed are just these few."
Foodcourt operators compete fiercely for tenders, but not on the basis of rent alone, Mr Pang said, adding: "Today, bidding is different. Foodcourts and supermarkets are typically anchor tenants of a mall, so they will look at your concept, design, business model, as well as how you will raise productivity, or use technology."
Koufu has taken various steps to raise productivity. More than 45 smart tray return robots are deployed at 16 foodcourts and coffee shops. Mobile ordering apps have also been implemented at some locations.
Nevertheless, there are fewer new mall openings here, so Koufu is starting to look overseas for growth, and expanding its food and beverage (F&B) retail businesses, Mr Pang said. F&B retail accounts for 51.4 per cent of group revenue, derived from the 81 food stalls that Koufu operates in its foodcourts and coffee shops, its drink kiosks like R&B Tea, and full-service restaurants like Elemen.
Koufu plans to use $30 million of the IPO proceeds to build an integrated facility that is expected to be completed in the second half of 2020.
Another $8 million will be used to refurbish and renovate its F&B outlets. The remaining $5 million will fund other expansion plans.
In particular, Koufu intends to complete the acquisition of a major stake in a business-to-business bakery in the fourth quarter this year, and to expand its bakery, confectionery and hot kitchen food production business.
Plans are under way to open a Koufu foodcourt at Sengkang General and Community Hospital and a Supertea F&B kiosk at Marina Bay Sands this month.
Although it has no fixed dividend policy, Koufu intends to recommend dividends of at least 50 per cent of net profit after tax generated in 2018 and 2019. This will exclude an interim dividend of $12.5 million that has already been paid this year. Three cornerstone investors have taken up 21 million shares in Koufu, but are not subject to any lock-up restrictions.
DBS is the sole issue manager, book runner and underwriter for the IPO.