With Oriental Kopi’s IPO just around the corner, investor interest in the food & beverage (F&B) industry has been reignited.

The market size for restaurants and cafes in Malaysia is estimated to be approximately RM79,445.0 million in 2023, highlighting the significant potential of the industry.

Another notable F&B company in Malaysia is Dolphin International Berhad (Dolphin), soon to be renamed Oasis Harvest Corporation Berhad (pending the proposed name change).

Some backstory about this company. Back in 2022, Dolphin acquired High Reserve for a total consideration of RM36.0 million, which was satisfied with 282.8 million Dolphin shares and RM17.5 million in cash.

High Reserve owns and operates three restaurant outlets under the brand “Uncle Don’s,” with one outlet now converted to Suwan Thai.

Initially, Dolphin planned to expand High Reserve to seven outlets. However, due to slower performance and losses registered in FY23 and FY24, a proposed variation of the acquisition sum was made, waiving RM9.6 million of the total acquisition sum, which is an immediate response taken by Dolphin to protect themselves.

A wise move indeed.

Despite these challenges, Dolphin will still benefit from a profit guarantee of RM4.9 million provided by the sellers of High Reserve, resulting in a significant cash gain for the company.

Together with the announcement, Dolphin will conduct a 10% private placement, issuing up to 13.4 million new shares to raise additional funds.

This has raised speculation about who will participate in the private placement and whether a new substantial shareholder will join the company, especially in light of the proposed name change.

Should investors now keep a close eye on Dolphin International?