Fruitas unit Balai readies IPO

Richmond Mercurio – The Philippine Star

December 28, 2021 | 12:00am


MANILA, Philippines — A food and beverage subsidiary of publicly listed Fruitas Holdings Inc. is set to file with the Securities and Exchange Commission an initial public offering (IPO) of up to P309 million to finance store network expansion, commissary setup, and future acquisitions.

Fruitas Holdings said wholly owned subsidiary Balai ni Fruitas Inc. intends to issue up to 325 million primary common shares at a maximum price of P0.75 apiece for its IPO.

The board of directors of Fruitas Holdings approved in a meeting yesterday its participation in the IPO by selling up to 50 million secondary common shares of Balai to increase the IPO size and public float of the company.

Fruitas Holdings will likewise provide an over-allotment option of up to 37.5 million secondary common shares of Balai.

The public float after the offer can reach 27.6 percent of Balai’s total issued shares if the over-allotment option is fully exercised.

Subject to regulatory approvals and market conditions, Balai plans to run the offer period in March next year, and targets to list on the Philippine Stock Exchange’s small, medium, and emerging (SME) board before the end of the first quarter of 2022.

First Metro Investment Corp. has been appointed as the issue manager, bookrunner and underwriter for the IPO.

“We evaluated several capital-raising options to fund the next phase of growth of Balai. Given the significant growth prospects of the bakery sector, distinct from the kiosks within Fruitas Holdings, we decided to undertake an IPO for Balai. This will provide Balai its own resources to take advantage of the opportunities presented to it,” Balai and Fruitas Holdings president and chief executive officer Lester Yu said in a statement.

Yu said primary proceeds would be used to expand Balai’s store network in major  cities and establish its own commissary to serve more customers.

He said a portion of the new capital would also be utilized to explore the possibility of acquiring other baked goods firms to broaden the company’s current product offerings.

Balai currently has three brands in its portfolio.

These are Balai Pandesal, which sells baked goods in community stores throughout neighborhoods and central business districts, Buko ni Fruitas, and Fruitas House of Desserts, which both sell fruit-based desserts in high-traffic locations, including malls and commercial centers.

It operates a total of 46 Buko ni Fruitas and Fruitas House of Desserts outlets as of end-September.

Since its acquisition of Balai Pandesal Corp. last June, it has increased the number of Balai Pandesal outlets from five to 23 as of the third quarter.

The range of Balai Pandesal baked goods is also currently available through Babot’s Mart, Fruitas Group’s online delivery portal for all its brands.

Balai is targeting to expand to 100 Balai Pandesal outlets by end of next year, and 150 outlets by end of 2023.

“The Balai IPO will also be beneficial for Fruitas Holdings shareholders as it unlocks the value of Balai. Fruitas Holdings will also remain as the controlling shareholder of Balai and continue to benefit from profits of Balai,” Yu said.

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