After buying American chain Coffee Bean & Tea Leaf (CBTL), Jollibee Foods Corporation (JFC) has leapt into the offshore capital market raising $600 million from the sale of perpetual securities via Singapore Exchange Securities Trading Ltd.
The action is rare to date amongst Asian restaurant chains. And, it is the first time the successful Philippines-based company has looked to raise outside capital since its initial public offering (IPO) in 1993.
Five decades of growth for Jollibee
The first Jollibee fast food outlet opened in 1978 in Manila. Its first franchise operation opened during the new company’s next year. Later, the first overseas restaurant opened in Taiwan in 1986.
There are now over 3,000 Jollibee restaurants, with at least 1,000 of them franchises. Over 1,400 of the outlets are in foreign markets. JFC also owns oither successfull chains like Chowking, Greenwich Pizza, Red Ribbon Bakeshop, Mang Inasal, and Burger King Philippines, in its home market. In international markets it’s also an owner of the Superfoods Group and Highland Coffee. After years of steady growth, JFC has a value of nearly $5 billion, turning over $3 billion in 2018.
Jollibee’s offshore perpetual capital securities issuance over-subscribed
The company made its first move into the offshore capital market in January this year, issuing US dollar Regulation S senior perpetual capital securities. The $600 million raised was higher than its planned issue figure of $400 million, after JFC’s move saw excellent demand. This interest allowed JFC to offer a rate of 3.9% per year for the first five years making it the lowest pricing for five-year perpetual securities launched by a Philippine company.
The capital raised, as per Business Inquirer, is set to cover the short-term debt from the acquisition of Coffee Bean & Tea Leaf (CBTL). JFC says this step is to “build a stronger foundation,” for growth “in order to achieve its vision to become one of the top five restaurant companies in the world.”
JFC acquired California-based CBTL officially in September 2019. The café chain has 1,200 outlets in over 25 countries. JFC plans to expand the brand in Asia. Company chairman and founder Tony Tan Caktiong, says the CBTL purchase will allow JFC “to become an important player in the large, fast growing and profitable coffee business.”
A vision of international growth
In January 2020, Jollibee opened its first stores in Tampa Bay, Florida, and on the island of Maui. These openings followed others in California and Arizona. Jollibee is aiming for 150 US outlets by 2023, and 100 in Canada, and it has also added a North American headquarters in Los Angeles.
There are 25 Jollibee openings planned for the US and Canada, in total, in 2020. This will be the company’s largest store expansion in a single year yet and marks its continual expansion overseas. JFC’s other brands with a presence in the US are Red Ribbon and Chowking.
The CBTL acquisition, as per CNN, when it was announced was predicted by JFC to take the company’s international business to 36% of all revenue.
The recent offshore capital market move will surely help to fuel JFC’s global plans. It’s also planning further expansion into China, with a goal of reaching 1,000 stores in the giant market. In recent weeks though, it has closed 14 outlets in Hubei province due to the coronavirus outbreak. However, JFC says it “remains very committed to keep building and growing a profitable business in China.”