Singaporeans have a strong affinity for Japanese food, which has become a staple of the local culinary scene. From ramen to sushi and yakitori, the variety of Japanese cuisine is vast, matching local enthusiasm. This familiarity and appreciation for Japanese fare in the city prompted the Japanese F&B group Food Innovators Holdings (FIH) to pursue a public listing on the Singapore Exchange S68 (SGX).
FIH is a Japan-based F&B group that owns and operates various Japanese restaurant brands. As of Aug 19, the group had 12 restaurants in Japan, 10 in Singapore, and four restaurants, one bakery and one central kitchen in Malaysia. Some of its more popular establishments in Singapore include Tendon Kohaku and Niku Katsumata.
The group may directly own some of its brands, but it also collaborates with restaurants to launch new brands in specific markets through a 50-50 profit-sharing model. In this collaboration, the group works with partners who manage the operations in the designated market. These business partners are responsible for day-to-day operations and management, retaining control over business planning and core human resources, while the group oversees, advises and assists with lease procurement, premises management and interior design. Profits and operating losses are equally shared between the group and the partnered restaurant operator.
These form the group’s food retail business (FRB), which also includes F&B consulting and operations management services, where it receives recurring income from the provision of consulting services. Apart from the FRB, the group also has another business segment that is solely in Japan — the restaurant leasing and subleasing business (RLSB). In this segment, the group holds the master lease for several restaurant premises in the metropolitan areas of Japan and subleases them to restaurant tenants. This complements the group’s consulting business, which is only done in Japan, as the group “packages” its services to tenants.
On average, RLSB brings a recurring income of about $2 million a month, translating to about $200,000 in recurring gross profit. With about 214 subleased properties, this means each property brings in a net profit of $1,000 monthly. As of Feb 29, the group’s occupancy rate stands at 99.2%.
In an interview with The Edge Singapore, FIH CEO Kubota Yasuaki says that the group’s FRB brings growth, as it is able to capitalise on market trends, while the RLSB offers the group stability and recurring income from the sublease agreements. The RLSB contributes about 45% of the group’s total revenue, while the FRB contributes 55%.
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Yasuaki views having these businesses as a significant competitive advantage compared to other listed Japanese food groups on SGX, such as Japan Food Holdings, Sakae Sushi and the recently delisted RE&S. As the F&B industry and the group’s restaurants benefit from the recovery following Covid-19, the group is pursuing an IPO on the Catalist board of SGX to support its growth.
Growth appetite
FIH will issue 14 million new shares, comprising one million public offer shares at 22 cents each in its public tranche and 13 million placement shares at 22 cents each. Based on this, the group’s market capitalisation is $24.9 million.
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The group will also raise $3.08 million in this IPO, one of the smallest fund-raising exercises on SGX, to fund its growth plans. Of the $3.08 million raised, the group will spend about $1.9 million to cover its listing cost and expenses, $0.5 million to expand its FRB outside of Japan and $0.5 million to acquire the rights to operate an anime-themed restaurant in Japan.
Yasuaki says: “We will spend about $0.5 million to expand our presence in Malaysia and Singapore through entry into new collaborations with Japanese restaurant operators. We will spend another $0.5 million to acquire the rights to open our first anime restaurant in Japan and hopefully bring that to Malaysia and Singapore later on.”
Yasuaki observes that the group’s presence in Malaysia is strong and experiencing high demand. As a result, the proceeds from the IPO for regional expansion will be initially directed towards Malaysia. Meanwhile, themed restaurants and cafés are popular in Japan, and the group currently operates a Moomin café based on the well-known Swedish cartoon character. Yasuaki notes that anime restaurants and cafés in Japan appeal to both locals and tourists. FIH’s anime restaurant is scheduled to open in 1Q2026. The remaining $0.1 million from the funds raised will be used for general working capital.
FIH’s Moomin-themed café in Japan has received a positive response from guests and plans to open another themed restaurant in 2026
When asked why FIH has chosen Singapore for its public debut, Yasuaki responds: “Singapore is a good hub for the Asian economy. We have plans to expand our business in Asia, and Singapore is at the centre of it all. By listing in Singapore, not only will our credibility with banks increase, we will also gain recognition in other Asian countries, allowing us to have an advantage in expansion.” Furthermore, the listing status will allow the group to obtain master leases on restaurant spaces in Japan.
He adds that the group is currently exploring opportunities for expansion into Vietnam and Australia through collaborations. While the group does not have a formal dividend policy, it has proposed paying 20% of its net profit after tax for FY2025 and FY2026.
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The group’s financial year ends in February. The IPO will close at noon on Oct 14, and shares in FIH are expected to commence trading on a “ready” basis at 9am on Oct 16. PrimePartners Corporate Finance (PPCF) is the sponsor, issue manager, underwriter and placement agent.
Consistent growth
Looking at the group’s past performance, FY2024 recorded earnings of $1.4 million, a recovery from a loss of $3.4 million in FY2023. In FY2022, earnings were just $0.4 million. Revenue has shown consistent growth, with FY2024’s revenue reaching $43.8 million, 10.3% higher than the $39.7 million recorded in FY2023. FY2023’s revenue was also up by 4.9% compared to FY2022’s $37.8 million.
Revenue growth in FY2024 was due to higher contributions from both the FRB and RLSB segments. FRB recovered from the pandemic, and the group acquired more master leases to be subleased.
Yasuaki says that while revenue increased in FY2023, earnings were down, and the group recognised a hefty impairment loss. Gross margins in FY2023 had yet to recover from the pandemic. Gross margin saw a large uptick in FY2024, coming in at 17.9% from 13.7% in FY2023.
In FY2024, the group also divested its business in Taiwan. Yasuaki explains that this was done in preparation for the IPO, as the group’s business in Taiwan is “too small” to expand, and it would have been better for the group to have divested and exited the Taiwan market.
With FY2024 showing growth in both revenue and profit, Yasuaki believes this is the right time for the group to go public, capitalising on the recovering F&B and tourism industry. He notes that foreign visitors to Japan have increased about sixfold in 2023 compared to 2020, while F&B spending by domestic visitors has risen by 96% since 2019. Additionally, foreign visitors are spending 38% more in the same period.
“We think that the F&B market has been recovering. We made a profit in FY2024, and we think that we will continue to be profitable,” says Yasuaki. With tourism recovering, Yasuaki anticipates revenue from foreign tourists increasing not only in Japan but also in Malaysia and Singapore.
