jfc tim ho wan
JFC is poised to capture a substantial ownership in Tim Ho Wan's master franchise in the Asia Pacific Region once the term of the Titan fund ends in 7 years.
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Jollibee hikes stake in Tim Ho Wan in pandemic rebound strategy
Ian Nicolas Cigaral (Philstar.com) - October 20, 2020 - 12:30pm

MANILA, Philippines — Fast-food giant Jollibee Foods Corp. is bumping up investments in Tim Ho Wan franchise, boosting its overseas portfolio as it looks outward and going digital to recover from pandemic.

In a disclosure to the stock exchange on Tuesday, Jollibee Worldwide Pte Ltd., a subsidiary of the Filipino food brand, is acquiring the 25% stake of Aragon Investments SPC in Titan Dining LP, a private equity fund that owns the Tim Ho Wan brand, a Michelin star-awarded restaurant.

The transaction worth SGD36.3 million or $26.7 million will be paid for “in cash” and is targeted completed by October 30. Once completed, Jollibee’s interest in Titan Dining will rise to 85% from the current 60%.

“This could be one measure (to weather the coronavirus pandemic) since they can look into expanding into other brands which will either adapt quickly to the changing environment (delivery > dine in) or will see a resurgence once the pandemic is lifted,” Luis Limlingan, managing director at Regina Development Corp., a brokerage, said in a Viber message.

Similar with companies from food to retail, Jollibee has been turning its sights to strengthening its digital services, starting with a P7-billion investments announced last July to expand delivery services and build a better booking platform.

The shift was warranted after the company, which before the pandemic struck has sourced most revenues from its wide network of branches, sank deeper into the red in the first half and booking net losses of P11.96 billion even when lockdowns were eased in June. 

Since then, Jollibee has been optimistic of a financial rebound next year when its digital investments are seen to slowly bear fruit. This, however, was not without repercussions as some underperforming local stores get shutdown permanently, all while international outlets of Jollibee brands expand. 

Apart from a Jollibee opening in Rome last month, Tim Ho Wan started operations in Shanghai, China last September. The company owns several food brands including Greenwich, Red Ribbon, Mang Inasal, Burger King and Chow King.

Jollibee started investing in the Tim Ho Wan’s franchise in May 2008 when the company poured SGD45 million for a 45% stake with Titan Dining. In October last year, that stake was hiked to 60% after Titan Dining doubled its fund size to SGD200 million.

Under the original purchase agreement between the equity fund and Jollibee, the Filipino firm may choose to “acquire a substantial ownership” in Tim Ho Wan once the fund’s term ends in 7 years or by 2025. The latest investments are covered of that agreement. It remains unclear if Jollibee will be pursuing a takeover of the brand from Titan Dining.

That said, investors welcomed Jollibee’s decision. Ahead of market closing, shares in Jollibee was trading up 9.44% to P169.20 apiece as of 12:23 p.m. 

JOLLIBEE FOODS CORP TIM HO WAN
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