Figaro cuts budget for stores, omits acquisitions in IPO plan

FIGARO Coffee Group, Inc. omitted plans to use a portion of net proceeds for potential acquisitions and decreased the budget for store launches and renovations, following the downsizing of its initial public offering (IPO) to P767.39 million.

Figaro is the holding firm of food brands such as Angel’s Pizza, Figaro Coffee, Tien Ma’s Taiwanese Cuisine, TFG Express, and Café Portofino.

According to the company’s prospectus dated Dec. 22, Figaro has maintained plans to use IPO proceeds for store openings and renovations, commissary expansion, debt repayment, and information technology infrastructure.

However, the company no longer included provisions for potential acquisitions. It previously planned to allocate P600 million of net proceeds to add food businesses to its portfolio in the next three years.

Figaro trimmed its IPO size by 57% to P767.39 million from P1.77 billion last week.

The company will now be offering to the public 930.166 million primary common shares for 75 centavos apiece, along with an overallotment option of up to 93.016 million primary common shares.

Without the overallotment option, Figaro plans to use 33% of the net proceeds for store openings and renovations. The company will now be using just P219.4 million of net proceeds for the stores, down from the previous target of P501.5 million.

The company aims to have 150 system-wide stores by end-2022 and over 300 system-wide stores in the country by the end of 2029.

Through IPO proceeds and internally generated cash, the company is eyeing to open 35 Angel’s Pizza outlets, 18 TFG Express kiosks, six Figaro Coffee shops, and two Tien Ma’s Taiwanese Cuisine restaurants within the next three years.

“We will prioritize the use of proceeds towards the stores opening in 2022,” Figaro said. The company plans to expand via 12 Angel’s Pizza outlets, six TFG Express kiosks, and three Figaro Coffee shops next year.

The company is also planning to roll out its store renovations in 2022. Renovations include “the improvements of the premises” of company-owned stores, upgrading generation sets, additional manpower, among others.

“For any shortfall in the Offer proceeds allocated for this purpose, we shall use internally generated cash flows to complement our plans for store openings and renovations,” Figaro said.

However, should the overallotment option be exercised, Figaro’s budget for store openings and renovations may bump up to P286.9 million from P219.4 million.

The company said the additional funds raised will be used for store launches planned for 2023 to 2024, which includes nine more Angel’s Pizza stores.

Meanwhile, Figaro plans to use P350.30 million of the IPO net proceeds to fund its commissary expansion, P80 million to repay debt, and P5 million for investments in information technology (IT) infrastructure.

The company plans to conduct its offer period for Jan. 10 to 14 next year, while its listing at the main board of the Philippine Stock Exchange is tentatively set to Jan. 24 under ticker symbol “FCG.”

Figaro mandated Abacus Capital & Investment Corp., China Bank Capital Corp., and PNB Capital and Investment Corp. as joint issue managers, joint lead underwriters, and joint bookrunners for the transaction. — Keren Concepcion G. Valmonte