Fried chicken to crayfish wraps: Philippines’ Jollibee eyes deals to grow

A customer walks past a Jollibee mascot at the entrance of a Jollibee franchise in Paranaque, Metro Manila. (Reuters)
Updated 18 February 2018
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Fried chicken to crayfish wraps: Philippines’ Jollibee eyes deals to grow

MANILA/SINGAPORE: Filipino billionaire Tony Tan Caktiong, who has built Jollibee Foods Corp. into a near-4,000 store purveyor of sweet-style spaghetti, burgers and fried chicken, is looking to buy existing brands in mature markets to help fuel future growth.
Dominant at home, where Jollibee has 1,000 eponymous stores welcoming diners with its smiling bee logo, Tan now wants to reshape the $5 billion group as a global fast-food company, bankers and fund managers say.
Primary targets include the United States and China, where it already has joint ventures, including Dunkin’ Donuts .
Tan, 64, said at a company event in July that half of Jollibee’s total sales would come from overseas stores in the next five years. Currently, foreign stores including joint ventures account for 30 percent of sales.
This week, people familiar with the matter said Jollibee was considering bidding for Pret A Manger, a UK-based chain selling organic coffee and wholesome sandwiches to office workers. It is still working out a valuation and has not yet decided to bid, the people said.
“Jollibee has to keep chasing growth. They own pretty much every large chain in their home market,” said a regional banker who has dealt with the company. “They are definitely not shy when it comes to looking at mature markets.”
Ysmael Baysa, Jollibee’s chief finance officer, told Reuters this week that buying new businesses “has always been part of our growth strategy.”
Tan started out with two ice cream parlours in the 1970s, and expanded Jollibee rapidly into a fast food chain dubbed “the McDonald’s of the Philippines.” Forbes ranks him as the country’s eighth-wealthiest man.
“They see where they could utilize the knowledge and synergies they have,” said Robert Ramos at Unionbank, who helps manage $795 million in funds and holds Jollibee stock. “They are increasing the revenue stream beyond the businesses they have now... They are choosing businesses in line with their core competence.”
As discretionary incomes have grown in Asia, the region has become the second-largest fast food market globally after North America.
Jollibee has created new domestic brands and has tie-ups with foreign chains. It bought a stake in Highlands Coffee, which outsells Starbucks in Vietnam, and opened its own outlets in Saudi Arabia and the United States.
“Premium credit”
Jollibee’s interest in Pret A Manger — which owner Bridgepoint is said to be preparing for a US listing this year — comes just two years after Tan paid around $100 million for a 40 percent stake in US-based chain Smashburger, his biggest overseas deal to date.
“If Jollibee wanted to do a $1 billion acquisition, it will have access to capital. It’s very liquid whether overseas or onshore. Jollibee is a premium credit,” said a person close to the company, who was not authorized to speak to the media and asked not to be named.
“Jollibee is very clear where they would like to grow: the Philippines, China and the US”
In China, the company operates about 400 stores of various brands, including joint ventures.
While Jollibee’s original menu is a hit at home and among the diaspora of millions of Filipinos working overseas, it’s a challenge to broaden its appeal to international diners — hence the drive to acquire global brands.
Jollibee’s revenue has more than tripled over the past decade to 113.9 billion pesos ($2.2 billion), its net income has jumped to 6.16 billion pesos, powered by strong consumer spending in one of the world’s fastest-growing economies, and its shares trade at around 242 pesos each, up from 51.50 pesos a decade ago.
Other Philippine companies, too, have used their plentiful cash and access to bank credit to make overseas deals, such as Universal Robina Corp’s acquisition of Snackbrands Australia for $462 million last year, and Alliance Global Group’s earlier $291 million buy of Bodegas Fundador from Beam Suntory. ($1 = 50.9390 Philippine pesos)


Egypt stock market plunges as retail investors take flight

Updated 19 September 2018
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Egypt stock market plunges as retail investors take flight

  • Biggest index drop in Egypt since mid-2016
  • Saudi Arabia outperforms in Gulf

LONDON: Egyptian stocks tumbled to their lowest level this year on Wednesday as retail investors took flight.
A sharp rise in Suez Canal revenues, a major foreign exchange earner for the country, was not enough to quell investors concerns about the strength of the currency.
The main Egyptian stock index lost 3.8 percent which some fund managers blamed on generally negative sentiment toward emerging markets worldwide as well as more local speculation about possible currency devaluation.
“Our channel checks suggest the sell-off in the Egyptian market is local retail and institutions driven, on currency fears and speculation over a further round of devaluation,” said Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, Reuters reported.
“Selling is further intensified as margin calls are triggered and technical support levels break down. The country canceled three consecutive Treasury auctions, citing investors’ unrealistic yield demands.”
Egypt’s Suez Canal revenues rose to $502.2 million in August up 6.7 percent from a year earlier according to official data released on Wednesday.
Elsewhere regional stock markets closed mostly lower with the exceptions of Abu Dhabi which edged 0.2 percent higher and Saudi Arabia, the best regional performer, which rose by 1.1 percent.
Saudi stocks are benefiting from the strong oil price which eased slightly yesterday but still hovered just under $79.
OPEC and some other oil producers including Russia will meet in Algeria on Sept. 23 to discuss how to allocate supply increases within their quota framework to offset the loss of oil exports from Iran following the introduction of sanctions by the US.
Those measures will come into force on Nov. 4 and data suggests that buyers are already retreating from Iranian crude purchases.
A key question for the oil price as well as regional stock markets in the weeks ahead will be the extent to which other Gulf oil exporters can compenaste for the loss of Iranian supplies by pumping more.