SINGAPORE - Japanese restaurant group RE&S Holdings launched its initial public offering (IPO) on the Singapore Exchange's Catalist board yesterday.
It is seeking to raise more than $10 million to expand its businesses in Singapore and Malaysia for a start.
RE&S is offering 38 million shares - three million public shares and 35 million placement shares - at 22 cents a share. Of the 35 million placement shares, six million reserved shares will be for subscription by directors and employees of RE&S and their subsidiaries, as well as business associates.
The offer price represents a price-to-earnings ratio of 11.6 times, based on the audited earnings per share for the financial year 2017, which ended on June 30.
Orchid 2 Investments, which is managed by Temasek Holdings' wholly owned subsidiary Heliconia Capital Management, has emerged as the sole cornerstone investor. The $3.52 million investment came from the subscription for 16 million cornerstone shares at 22 cents apiece. Orchid 2 will have a 4.5 per cent stake in RE&S' post-IPO capital. The IPO will raise $10.4 million in net proceeds and $11.9 million in gross proceeds. The market capitalisation of RE&S is expected to be about $77.9 million post-IPO.
The offer will close at noon next Monday and trading is expected to commence at 9am next Wednesday.
RE&S said the proceeds will be used to open new food and beverage outlets in Singapore and Malaysia, refurbish and improve production processes at existing outlets, and for business expansion through acquisitions, joint ventures and strategic alliances.
The company is also looking into making food orders more seamless for customers through the use of personal devices to place orders, but that has its set of challenges.
Mr John Yek, executive director and chief executive of RE&S, told The Straits Times that it is not easy to get customers to use a device as some still prefer to have a staff member take their orders.
He added that the company is working with food delivery service Food Panda but offerings at this point are "limited".
"We are reluctant to compromise on our standard. When you deliver, there's a holding time. When the product gets to the customer, the product would have deteriorated. It does not mean that the potential for restaurants has diminished. Delivery online can co-exist with the traditional restaurants."
RE&S owns and operates 72 F&B outlets in Singapore and five in Malaysia. These include Kuriya and Ichiban Boshi.