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By: Marvin Germo | May 10, 2018

Jollibee positions in Tim Ho Wan

Jollibee, listed as Jollibee Food Corporation (JFC) in the Philippine stock market, is planning to acquire a master franchise of Tim Ho Wan in Asia Pacific. It will invest 1.74B Philippine peso or 45 million Singaporean dollars in a private equity fund, Titan Dining LP, for said franchise in order to acquire 45% of its total committed investments and to which the remaining percentage will come from other investors. Jollibee will operate as a franchisee of Tim HO Wan in Shanghai giving them the opportunity to have a significant interest in the long term. The purchase agreement states that the fund’s term will end in seven years allowing Jollibee to acquire a substantial ownership in THWPL at the end of the period.

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Tim Ho Wan is a Michelin-star Chinese dimsum restaurant chain that originated basically in Hong Kong. It opened its store on 2009 and since then it has established numerous branches worldwide; its first international branch opened in Singapore and it also has a branch in the Philippines located in SM Megamall, Metro Manila. It has been named as the world’s most affordable Michelin-star restaurant and was rated by CNN as the best value dim sum restaurant in Hong Kong.

Tim Ho Wan presents great potential

Since the restaurant chain is still newly expanding, it’s a bold move by Jollibee to acquire a substantial amount of its shares. This means that the latter sees big potential in the former. Jollibee entered into an agreement with Titan Dining LP that it will acquire the entire Asia-Pacific master franchise of the Tim Ho Wan brand, Tim Ho Wan Pte Ltd (THWPL) and Dim Sum Pte Ltd.

Jollibee going global

Jollibee is considered the largest fast food operator in the Philippines and also the largest Asian food service company owning and acquiring not only Philippine brands but also foreign ones. In fact, it has secured approval for the acquisition of additional shares in Smashburger. Apart from that, Jollibee has just opened its first European branch in Italy and a third outlet in Toronto, Canada. Clearly, Jollibee is expanding internationally because it sees more returns in the global market.

Positive outlook

Jollibee’s acquisition of Tim Ho Wan will be an additional investment to the company. It expects to reap good financial returns from the planned acquisition as mentioned by Jollibee’s Chairman Tony Tan Caktiong. The company has acquired three Chinese restaurants already, to name them they are: Chowking in the Philippines, Yonghe King, a Taiwanese-inspired restaurant chain, and Hong Zhuang Yuan located in China. Surprisingly, 23% of the system wide sales in 2017 came from the said trio. So this mainly means that there is a demand towards comparable food companies. This might have prompted or signalled its finance department to invest more in similar types of food service companies. Jollibee is indeed starting to expand and venture overseas which explains its investment in another food service company which is Tim Ho Wan.

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