Joining hands to tap new opportunities

 

A worker preparing more of the sweet dessert at the Inside Scoop factory.

PETALING JAYA: The Inside Scoop Sdn Bhd (TISSB) was the obvious choice when Farm Fresh Bhd (FFB) was scouting around for a partner to gain a foothold in the Malaysian ice cream market.

As the CEO of FFB Loi Tuan Ee told the Vulcan Post of Singapore, the packaged ice-cream market was then dominated by foreign brands such as Nestle and Unilever.

“I felt that with this acquisition, we could speed up our entry into the ice cream market with the best knowledge that we can get,” Loi said.

Apart from diversifying FFB’s revenue base Loi also saw an opportunity for cross-selling.

To top it off, both companies have similar business ethos.

TISSB’s mission of making fresh, natural ice cream sans artificial flavouring is closely aligned with FFB’s commitment to omit preservatives or added sugar from its dairy products.

For TISSB, the partnership meant that FFB’s capabilities and expansion plan meant more options.

“They are able to help us solve some of our problems as we scaled up. It’s quite synergistic,” Edmund Tan, a founding parter of TISSB told FMT Business.

The acquisition

The RM83.9 million for a 65% stake in TISSB was derived from the agreed enterprise value (EV) of the company of RM102.2 million.

Apart from Tan, who held a 61% stake, the other shareholders of TISSB were Derrick Wu with 37.9% and Harsh Rajpal with 1.1%.

In a filing with Bursa Malaysia Securities Bhd on Feb 15, FFB said it would first acquire a 53% stake for RM68.4 million from the existing shareholders of the ice cream chain.

Of the sum, RM48.4 million would be paid in cash and the remaining RM20 million through the issuance of 13.16 million new shares in FFB at RM1.52 per share.

Wu and Rajpal cashed out, leaving Tan the only one of the original shareholders to proceed with the partnership with FFB.

The acquisition by FFB of another 12% of the enlarged issued shares in TISSB for RM15.5 million is expected to be completed this month.

Future plans

In its filing with Bursa Malaysia, FFB said there are plans to double the number of Inside Scoop outlets in the medium term as well as to eventually enter the consumer packaged goods (CPG) segment.

Currently, there are 37 Inside Scoop outlets across Malaysia.

There also are plans to expand to the Philippines and Indonesia.

Strong growth 

TISSB has recorded impressive growth over the past few years.

Its revenue rose from RM10 million in 2017 to RM36.6 million in 2021, representing a compound annual growth rate of 38%.

Even the Covid-19 pandemic failed to hold the company back. In 2020, TISSB recorded a revenue of RM22.5 million.

Even in the midst of several movement control orders, the revenue grew an impressive 61.3% to RM36.3 million the following year, thanks to a skyrocketing demand through takeaways. - FMT