Food court operator, Koufu, will make its much-anticipated debut on the Singapore stock market at 9am on July 18. The public offer closed at noon today. The company has priced its shares at 63 Singapore cents apiece and will raise net proceeds of S$70.5 million through the sale of 51.2 million new shares and 45.8 million shares initially owned by Koufu founder Pang Lim and his wife.
Koufu is expected to have an initial market cap of S$349.8 million, which translates to a valuation of around 13 times its 2017 earnings. Out of the 97 million shares on offer, 6.3 million will be offered to the public, with the rest on a placement tranche. Before retail investors dive in on the action, here are some things you should know about the company.
1. Humble beginnings
Koufu was founded by Mr Pang Lim back in 2002 with his wife and executive director, Ms Ng Hoon Tien. The company started as coffee shop operators and coffee shop stall owners. Within 10 years, the founders expanded the business to include large-scale modern food courts in residential and commercial shopping malls. In 2012, it established its first overseas food court in Sands Cotai Central, Macau.
After the initial public offering (IPO), the husband and wife team will still own 78.7% of all outstanding shares and have agreed to a six-month lock-up period.
2. Business breakdown
In 2017, Koufu derived 48.6% of its revenue from outlet and mall management, with the remaining 54.6% coming from the 81 food stalls that the group operates in its own food courts and coffeeshops, its drink kiosks and full-service restaurants. It also opened one new food court and closed two underperforming ones during the year. This brings the total number of food courts that it manages to 47.
In addition, it manages 13 coffee shops, one hawker centre, one shopping mall and one food court overseas.
3. What will the IPO proceeds be used for?
In total, the group will receive S$43 million from the IPO proceeds. S$30 million of which will be used to build an integrated facility to house a larger central kitchen, dishwashing facility and R&D centre. Completion of this facility is expected to be in 2020.
Another S$8 million is going to be used to refurbish and renovate its existing F&B outlets, and the remaining S$5 million will be used to fund expansions. One acquisition that is likely on the cards is the purchase of a major stake in a business-to-business bakery in the fourth quarter of the year, to expand its bakery, confectionery and hot kitchen food production business. There are also plans to open a food court at Sengkang Hospital and a Supertea kiosk at Marina Bay Sands.
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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 writer Jeremy Chia doesn’t own shares in any companies mentioned.