Fruitas to use part of one-off Balai gain for Ling Nam deal

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FRUITAS Holdings, Inc. plans to use part of its one-time gain from selling existing shares in subsidiary Balai ni Fruitas, Inc. to fund its latest acquisition, Ling Nam Wanton Parlor and Noodle Factory.

In a disclosure on Monday, Fruitas said the sale of the Balai shares “will result in an increase of its equity.” It added that at the Fruitas level, proceeds “will be deployed into new strategic initiatives, including the acquisition” of Ling Nam.

On June 30, Balai listed 1.49 billion primary and secondary shares, along with 37.5 million option shares at 70 centavos apiece during its initial public offering (IPO).

Fruitas raised around P203.8 million in net primary proceeds for the unit and minimum gross proceeds of P35 million for Fruitas, “with additional proceeds potentially coming after the price stabilization period.”

“The IPO proceeds and the company’s strong cash generation from our operations will allow us to aggressively grow our business,” Balai ni Fruitas, Inc. President and Chief Executive Officer Lester C. Yu said.

Currently, Balai has three active brands, namely: Buko Ni Fruitas, Fruitas House of Desserts, and Balai Pandesal.

Fruitas has aggressively expanded the Balai Pandesal brand from five stores at the time of acquisition to 38 stores as of June 2022. It has opened new stores in different parts of Metro Manila, including a community store in Brgy. Fairview Park, the first Balai Pandesal local bakery in Brgy. Krus na Ligas, and the first Balai Pandesal kiosk in Ayala Malls Cloverleaf.

Balai targets to grow its store network to 130 by 2023, and 200 by 2026.

The company reported revenues of P148.9 million for 2021, a 35% increase from its 2020 revenue of P110.1 million. It recorded a net profit of P8.5 million last year, without disclosing a comparative figure, which it said was driven by the addition of the Balai Pandesal brand and the strong performance of its stores.

For the first quarter of 2022, Balai posted revenues of P60.6 million and a net profit of P6.4 million, which it said were 41% and 75% of expected full-year 2021 levels, respectively.

“This was achieved despite stricter mobility restrictions particularly in January 2022,” it said, adding that the company “expects even faster growth in subsequent quarters.”

Balai started its operations in August 2005 when it opened its first Buko Ni Fruitas kiosk in Robinsons Place Manila serving fresh coconut-based beverages and desserts. Since then, the company has expanded to create and acquire new brands.

Fruitas aims to replicate the organic expansion that it has done for other small acquisitions such as de Original Jamaican Pattie, Sabroso Lechon, and The Tofu Store, which was rebranded into Soy & Bean, and successfully integrate them into the group.

Through the Balai IPO, Fruitas said it “continues its objective to be a ubiquitous food and beverage company with increased penetration and scalability in the market.”

Its latest acquisition target, Ling Nam, was built in the 1950s. The restaurant is known for its Cantonese dishes such as noodles, congee, and other dim sum products.

At the stock exchange, Balai shares were unchanged on Monday at P0.67 apiece. — Justine Irish DP. Tabile

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