Food Innovators Holding Limited
Food Innovators Holdings Limited ("FIH" or the "Company") is offering 14m shares at $0.22 each, for which 13m shares will be through placement and the remaining 1m shares via a Public Offer. The IPO will close on 14 Nov at 12 noon and starts trading on 16 Oct 9am. FIH has two business models - the first is to be a master lease and sublease the space to other tenants and the second is to operate and manage restaurants. The Company currently has 12 restaurants in Japan, 10 in Singapore and 4 in Malaysia. The market cap based on the IPO price is around $24.9m. Financial Highlights FIH's revenue grew from $37.8m in FY2022 to $43.8m in FY2024. It is quite funny to see that being a master land lease holder has a higher margin than operating the restaurants, once again illustrating the point that it is better to be a landlord to shake leg and collect rent. According to the prospectus, the PER is around 19x. The Company intends to pay 20% of its net profit after tax a
Comments
1. Prospectus states stabilisation/over-allotment option of 46,193,000 units (13.8% of offering).Prime reit announced yesterday Stabilisation/over-allotment is 22,727,000 Units (6.8% of offering). This is almost 50% reduction. There should be an explanation how this affects investors, is this a reduction in stabilisation/over-allotment option. As an investor, I think a bigger amount available to stabilise is better.
2. Another announcement says the public offer or retail tranche has increased from strong demand. Public tranche went up to 40,909,000 Units, above original size of 16,761,000 Units. Where did the extra 24,148,000 units for this increase come from. The announcement does not say. Guessing:
a. 23,466,000 units came from reducing the stabilisation ability/over-allotment option for the IPO; and
b. 682,000 units are unaccounted for.
It is good for issuer to clarify where the units from the public tranche demand comes from. The prospectus does not say that over-allotment option/stabilisation can be reduced to satisfy extra demand from retail investors.
3. If the over-allotment option is reduced, the issuer should clarify the resulting difference to information in the prospectus. There are many pages that use the original over-allotment option figure. EG: page 87 the shareholding of major shareholders assumes the over-allotment option is exercised in full, are based on original over-allotment option size of 46,193,000 units (not 22,727,000 units). KBS REIT Properties III’s final shareholding is not 182,216,000, but 205,682,000 which is 22.3% (not 19.7%) of the total unit capital.
4. There is no announcement on the placement tranche demand. Also no announcement whether placement agreement was signed (supposed to be 15 July according to prospectus). Since Demand = Placement tranche + Public tranche + over-allotment option. If the over-allotment option is reduced, does that mean that total demand is reduced? In this case it seems to have been shifted to public tranche, and it is unclear why. They issuer should clarify whether the over-allotment option demand was originally intended to be from the institutional placement and whether that demand now is no longer there but only in the retail tranche and is that the reason for the change?
5. Can the issuer or banks change the offer structure stated in the prospectus so drastically after the close of the IPO? Retail investors rely on the offer structure stated in the prospectus when they apply. Would a retail investor still have bought if they knew the stabilisation/over-allotment option would after close be reduced by almost 50%. Eagle REIT stabilisation amount was also 6+%, but share price went down. Does reducing the stabilisation from 13.8% to 6.8% mean like Eagle a lesser ability to stabilize, and greater risk to share price?
6. Does the change in offer structure mean that the bankers do not have to underwrite? There should be an explanation, why the change, and if it affects underwriting by the bankers. If the IPO is not underwritten, this must be clearly stated in the prospectus.