5 Things You Need To Know About Jumbo Group Limited’s Upcoming IPO

The much awaited initial public offering (IPO) for Jumbo Group Limited has finally arrived.

I remember the excitement in the air when the news broke that Jumbo Group was planning an IPO. Most of us were eager to find out more about the public offering. After all, chili crabs are close to Singaporean hearts. In the spirit of investing in what we know (or feast upon), Jumbo Group fits the bill nicely.

So, we spent some time diving into the prospectus. From there, here are the top five things you should know about the IPO of Jumbo Group Limited.

1. What is Jumbo Group Limited?

Beyond its flagship Jumbo Seafood restaurants, investors might be interested to peel back the curtain on Jumbo Group. The company has 14 food and beverage outlets in Singapore and another two outlets in China. Apart from that, Jumbo Group also manages another two outlets owned by its associates and receives licensing fees for four outlets in Japan from its associated company.

Jumbo Group also has a catering arm in Singapore. On top of that, the company also retails and distributes packaged sauces and spices through various channels.

2. What is does the IPO offer?

Jumbo Group is set to be listed on the Catalist board on 9 November 2015. The food and beverage outfit is offering a total of 88.2 million shares. A private placement will be made for 86.2 million shares while remaining 2 million shares will be offered to the public.

At the same time, the company will be issuing an additional 72.1 million shares to a select group of cornerstone investors.  The list of investors include OSIM International Ltd’s (SGX: O23) founder, Mr. Ron Sim, and a subsidiary of Temasek Holdings. The share count of Jumbo Group is set to increase from 481 million shares to 641.3 million shares after the IPO.

3. How much is the company valued at?

Based to its issue price of S$0.25 per share and an expected share capital of 641.3 million shares (post-invitation), Jumbo Group is valued at S$160.3 million. That will value the company at a price to book value of 3.7 times its book value post-invitation and at 11.6 times its price to earnings ratio post-invitation.

4. What is management planning to do with the cash?

The net proceeds from the IPO is estimated to be S$37.5 million. From that amount, the company plans to spend about 30% of the proceeds in building new outlets and to refurbish older outlets. It will also spend 28.7% on acquiring new property, plant and equipment. Lastly, 35% of the IPO cash is earmarked for general working capital and general corporate purposes.

5. Conditional interim dividends

Foolish investors should note that the company has declared a conditional interim dividend worth S$51.7 million. This sizable figure is 38% more than the net proceeds from the IPO. The dividend will be paid out within five business days after the company debuts on the Catalist board.

Foolish Summary

With that in mind, is the company worth a place in your stock portfolio? It’s a question worth pondering on.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim does not own shares in any of the companies mentioned above.