KFC Relist Again? Introduction of QSR IPO - Part 1
KFC and Pizza Hut Franchise - QSR Brands (M) Holdings Berhad
In last week, there was a rumor arose from the market that QSR Brands (M) Holdings Berhad 【QSR】 is going to be listed again after prepared for years. QSR, a company that operates KFC and Pizza Hut outlets and business in Malaysia, Singapore, Brunei and Cambodia, has been planing for relisting since it was delisted from the Main Board of Bursa Malaysia in 2013. However, QSR's relist plan was delayed again and again due to uncertain economic factors until now.
QSR was few steps away from realising its relist plan in 2019 and even the initial version of QSR's IPO Prospectus had been released on the official website of Securities Commissions Malaysia. When everything was looking fine for interested market participants, managemental and shareholder of QSR made a stunning decision to halt its IPO again. But why and what happened at that time?
I will shared some information about QSR IPO and its delisted history with 2 posts, including the timeline of controversial privatization of QSR and KFC (M) Holdings Berhad 【KFC】. The following content also contain some details of QSR IPO plan in 2019 and 2021.
Intro - Privatization of KFC and QSR
Timeline of KFC's and QSR's privatization begins on 14th December 2011, and the story ended on 7th February 2013 when they had been privatized for a month and delisted from the Main Board of Bursa. Since this privatization was occurred 8 years++ ago, I can't find any credible and reliable stock price charts of these companies. The following contents will focus on the content in companies announcements, financial statements and annual reports.
There are many companies and entities involved with the privatization of public companies KFC and QSR in 2013. 2 of them that played crucial roles during the privatization were Johor Corporation 【JCorp】, a Malaysian Johor state-government linked company and Kulim (M) Berhad 【Kulim】, a public listed company on Main Board of Bursa.
These 3 public listed companies has the same largest shareholder, JCorp, directly and indirectly. Besides, these 3 companies have the same fate of being privatized and delisted from Bursa Malaysia.
These are the background of KFC, QSR, Kulim and JCorp.
KFC Holdings (M) Berhad
You should know what was the core business of this listed company when you look at its name. KFC Holdings was the sole franchise operator of KFC in Malaysia, Singapore, Brunei and owned 11 KFC outlets in India before it was delisted.
From the data stated in KFC Annual Report for FY2011, the top 30 largest shareholders held a total of 90.86% issued shares. JCorp indirectly owned 51.85% issued shares through KFC's largest shareholders, QSR Brands (M) Holdings Berhad. Besides, Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentara owned 22.90% and 0.28% respectively. The rest of 90.86% were held by investment funds and both local and foreigner financial institution.
QSR Brands Berhad | QSR Brands (M) Holdings Berhad
QSR's business was highly correlated with KFC's dining services and related business operations, while Pizza Hut's catering business belongs to QSR. QSR was the largest shareholder of KFC Holdings and it held more than 50% of KFC's issued shares.
From the data stated in QSR Annual Report for FY2011, the top 30 largest shareholders held a total of 85.46% issued shares. JCorp indirectly owned 56.82% issued shares through QSR's largest shareholders, Kulim (M) Berhad. While Lembaga Tabung Haji and Employee Provident Fun owned 2.52% and 0.39% respectively. Same as KFC's shareholder structure, the remaining of 85.46% were held by investment funds and both local and foreigner financial institution.
Kulim (M) Berhad
Kulim is a multi-diversified plantation company based in Johor, Malaysia. The history of Kulim can be traced back to 1993 when Kulim Rubber Plantations Ltd was incorporated in United Kingdom. It was listed on Main Board of Kuala Lumpur Stock Exchange in 1975 and JCorp became its largest shareholder by next year.
Since 2010, Kulim had disposed few core business that generated tremendous revenue and earnings. Including the disposal of QSR Brands Berhad shares to a Special Purpose Vehicle (SPV) held by JCorp, CVC Capital and EPF. Kulim also disposed New Britain Palm Oil Limited (NWPOL) to Sime Darby in 2015.
Soon after that, Kulim was privatized by its largest shareholder, JCorp and it was delisted from main board in August 2016.
Johor Corporation
Johor Corporation (JCorp) is a Malaysian Johor-state-government-linked company. It was established in 1968 as a part of the government's affirmative action programs to restructure its multi-ethnic society by eradicating the economic imbalance between the Malays and the non-Malays
Apart from the 3 listed companies mentioned above, JCorp is the largest shareholder of few listed public companies and business entities, directly and indirectly. Few examples are:
- Public Listed Companies
- KPJ Healthcare Berhad
- Al-Aqar Healthcare REIT
- Al-Salam Real Estate Investment Trust
- E.A. Technique (M) Berhad
- Others
- Johor Land Berhad
- Kara Holdings
- TPM Technopark
The total asset value of JCorp is currently approximately RM23.3 billion. JCorp's plan to reorganize its cooperate assets has been spread out on the market months after the outbreak of COVID-19 pandemic. One of the more noteworthy is the re-listing plan of QSR Brands (M) Holdings Berhad through Initial Public Offering (IPO).
Shareholder Structure of KFC and QSR
This relationship map is based on the shareholder list from the FY2011 Annual Report of KFC and QSR on April 2, 2021, and the shareholder list from the FY2011 Annual Report of Kulim on May 4, 2012.It was created to mainly show the relationship between these four companies or entities at that time.
Privatization Timeline of QSR and KFC
14th December 2011
The Board and the board of directors of KFC announced that they had received the Letter of Offer from MESB, wherein MESB stated its intention to acquire the following:
- Substantially all the business and undertaking, including substantially all of the assets and liabilities of QSR; and
- The entire business and undertaking, including all of the assets and liabilities of KFC.
Both the offers proposed by MESB, which were KFC Offer and QSR Offer,were inter-conditional. JCorp and CVC Funds were the ultimate offerors for the KFC Offer and the QSR Offer. As at 14 December 2011, JCorp and CVC Funds owned 51% and 49% of MESB through TPSB and Melati, respectively. The diagram below illustrates the group structure of MESB as at 14 December 2011:
Put it simply, ultimate offerors planned to privatize both KFC and QSR with following offer prices:
- RM6.80 for each outstanding QSR Issued Shares
- RM3.79 for each outstadning QSR Issued Warrants
- RM4.00 for each outstanding KFC Issued Shares
- RM1.00 for each outstanding KFC Issued Warrants
21st December 2011
OSK, on behalf of the Board, announced that the Board, save for the Interested Directors, had considered the QSR Offer, and had resolved to accept the QSR Offer subject to further negotiations and mutual agreement on terms and conditions to be incorporated into a definitive sale and purchase agreement.
10th January 2012
QSR's largest shareholder, Kulim, received an offer letter from Dewan Perniagaan Melayu Malaysia (DPMM), the latter intended to acquire all issued shares held by Kulim with RM6.90 per share, 10 cents higher than the price set in QSR Offer.
16th January 2012
The Board of Kulim (M) Berhad rejected DPMM's offer.
23rd April 2012
OSK, on behalf of the Board, announced that QSR and MESB had mutually agreed in writing that the date for execution of the definitive sale and purchase agreement for the Proposed QSR and KFC Disposal shall fall on a date before 21st May 2012 or such other later date as the Parties may mutually agree.
18th May 2012
OSK, on behalf of the Board, announced that QSR had entered into the Agreements with TPSB in relation to the Proposed QSR Disposal. TPSB had entered into the Agreements in place of MESB in consideration of MESB agreeing to waive all its rights to the Letter of Offer. Apart from that, any liability of MESB under the Letter of Offer was discharged by QSR after this agreement was made.
Prior to the date of the BSA, the Buyer has undertaken an internal restructuring whereby TPSB has become the wholly-owned subsidiary of MESB. TPSB, Triple Platform Sdn. Bhd., was a special purpose vehicle (SPV) being used to obtain financing for the the purpose of facilitating proposed acquisition of the business and operations of KFC and QSR. As at the date of the BSA, KCL, a wholly-owned subsidiary of EPF, has agreed to co-invest together alongside Melati Group Limited in Melati for its investment into MESB. The shareholding structure of TPSB was summarised as shown as follows on 12th May 2012:
Once the Proposed QSR Disposal is done, QSR will undertake to return the cash proceeds arising from the Proposed QSR Disposal to the QSR Shareholders and QSR Warrantholders through the Proposed QSR Capital Repayment and the Proposed QSR Warrant Scheme respectively. Please refer to Section 3 and Section 4, Part A of this Circular for the details of the Proposed QSR Capital Repayment and Proposed QSR Warrant Scheme.
Besides, TPSB entered into a separate BSA (business sale agreement ) and PSA (properties sale agreements) with KFC in relation to the KFC Offer. Accordingly, OSK has, on behalf of the Board of Directors of KFC, announced the Proposed KFC Disposal Proposed KFC Capital Repayment and Proposed KFC Warrant Scheme.
14 September 2012
OSK, on behalf of the Board, announced that QSR and TPSB had, on even date, mutually agreed on the following:-
(a) that upon issuance of four (4) new KFC Shares to QSR and simultaneously with the transfer of all the assets and liabilities of QSR at the completion of the BSA, QSR will transfer the four (4) new KFC Shares to TPSB;
(b) to extend the stop date of the BSA (being the last date for all Conditions Precedent to be fulfilled or waived in accordance with the BSA) from 17 September 2012 to 19 November 2012: and
(c) to extend the Completion Date from a date falling within six (6) months from the date of the BSA to a date falling on or before last date of Year 2012.
5th/6th Novermber 2012
7th January 2013
The stock trading for both KFC and QSR has been halted since 7th Jan 2013 to facilitate the process of capital repayment to its shareholders on 25th January.
7th February 2013
KFC and QSR were delisted from the Main Board of Bursa Malaysia Stock Exchange (Bursa), the cost of privatization was estimated at RM 5.2 Billion .
End of Part 1
From receiving the Offer Letter to delisting, the privatization of the two listed companies here, KFC and QSR, took almost a year. Currently, it is difficult to find out what the market thought of this privatization at the time, I can't even find their shares price chart after searching them for few hours.
After reading some relevant materials, I found that after the completion of the privatization, JCorp intended to relist these two companies after undergoing with internal integration and re-organization. JCorp proposed to complete the plan 4 to 5 years after the privatization. In the early days, the plan was to make TPSB go public, but the plan has been change to make QSR go public again.
Even though QSR was very closed to go public in late-2018 to early-2019, but its shareholder and management team decided to suspend QSR relisting plan after they fail to compromise with various financial institutions regarding market valuation of QSR. After the tremendous success of two giant IPO, MRDIY and CTOS with outstanding performance on the first day of their listing, JCorp has been planning to revitalize QSR relisting plan again as the market seem to accept IPO at the time now. It is hard to say QSR will be successful as other IPOs, but it could be the next giant IPO that everyone should paid attention.
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