Balai ni Fruitas Inc. (BALAI), a wholly-owned bakery subsidiary of Fruitas Holdings Inc., is planning an initial public offering worth up to P309 million for its expansion program.

In a disclosure to the Philippine Stock Exchange, Fruitas said BALAI is set to file a registration statement with the Securities and Exchange Commission (SEC) for its IPO.

Proceeds raised from the planned IPO will be used to support BALAI’s store network expansion, commissary setup, and to fund future acquisitions.

BALAI is targeting to expand across the Philippines to 100 Balai Pandesal outlets by end of 2022 and 150 Balai Pandesal outlets by end of 2023.

The firm acquired certain assets of Balai Pandesal Corporation in June 2021 and since the acquisition, has increased the number of Balai Pandesal outlets from 5 to 23 as of end-September 2021.

The range of Balai Pandesal baked goods is also currently available through Babot’s Mart, Fruitas Group’s online delivery portal for all its brands.

BALAI intends to issue up to 325 million primary common shares in its IPO. The maximum price for the IPO has been set at P0.75 per share.

The Board of Fruitas Holdings also approved its participation in the BALAI IPO by selling up to 50 million secondary common shares of BALAI to increase the IPO size and public float of BALAI.

Fruitas Holdings will also provide an over-allotment option of up to 37.5 million secondary common shares of BALAI. The public float after the offer can reach 27.6 percent of BALAI’s total issued shares if the over-allotment option is fully exercised.

Subject to regulatory approvals and market conditions, BALAI plans to run the offer period in March 2022, and targets to list on the PSE's SME board before the end of the first quarter of 2022.

"We evaluated several capital-raising options to fund the next phase of growth of BALAI,” said BALAI and Fruitas President and Chief Executive Officer Lester Yu.

He explained that, “Given the significant growth prospects of the bakery sector, distinct from the kiosks within Fruitas Holdings, we decided to undertake an IPO for BALAI.

“This will provide BALAI its own resources to take advantage of the opportunities presented to it,” said Yu noting that, “The primary proceeds will be used to expand BALAI’s store network in major Philippine cities and establish its own commissary to serve more customers.”

He added that, “Part of the new capital will also be utilized to explore the possibility of acquiring other baked goods firms to broaden the company’s current product offerings.”

“The BALAI IPO will also be beneficial for Fruitas Holdings shareholders as it unlocks the value of BALAI. Fruitas Holdings will also remain as the controlling shareholder of BALAI and continue to benefit from profits of BALAI," said Yu.

BALAI currently operates three brands: Balai Pandesal, which sells baked goods in community stores throughout neighborhoods and central business districts, Buko ni Fruitas, and Fruitas House of Desserts, which both sell fruit-based desserts in high-traffic locations including malls and commercial centers.

As of end September 2021, in addition to its 23 Balai Pandesal outlets, there are also a combined 46 Buko ni Fruitas and Fruitas House of Desserts outlets.