Karaoke operator Goodwill Entertainment aims to hit the right notes in Catalist IPO, raise S$6.5 million in net proceeds

KARAOKE and live show operator Goodwill Entertainment is looking to raise S$6.5 million in net proceeds from its listing on the Catalist board of the Singapore Exchange, the company said on Wednesday (Oct 30).

The 60 million placement shares, priced at S$0.20 apiece, comprise 42.5 million new shares and 17.5 million vendor shares. There will be no public tranche.

In total, the placement of new and vendor shares will raise S$12 million in gross proceeds. The net proceeds from new and vendor shares will be approximately S$9.8 million.

Proceeds from the sale of the vendor shares will not be received by the company, said Goodwill Entertainment.

The vendor shares represent 4.9 per cent of Goodwill Entertainment’s share capital before the placement, and will be sold by Mengkim, a controlling shareholder of the company.

Mengkim is a company incorporated in 2005; its shareholders are Thang Teck Jong, Goodwill Entertainment’s board vice-chair and non-executive director, and his wife, Kong Ling Ting.

After the placement, the new and vendor shares held by public shareholders will represent 15 per cent of the company’s enlarged share capital of 400 million shares.

Based on the placement price, Goodwill Entertainment is expected to have a market capitalisation of S$80 million upon listing.

Plans in the pipeline

Founded in 2015, Goodwill Entertainment operates multi-entertainment concepts, including karaoke facilities and performance halls.

In an interview with The Business Times, founder, executive chair and chief executive Flint Lu said that the company has plans for expansion in several areas – geographically, operationally and into new segments.

Under its use of proceeds, S$1.6 million will be used to broaden its existing business verticals; S$645,170 will go towards investment into entertainment technologies. Another S$1.3 million is meant for general working capital requirements.

It plans to open a central kitchen in Woodlands to handle its food and beverage (F&B) offerings at its karaoke lounges and its live-show concept. Many of its venues already have kitchens, but the central kitchen would ensure that their offerings are of the same standard.

The group is also soon to launch craft beers brewed in its own microbrewery, which is located in its flagship HaveFun Karaoke outlet at Cineleisure Orchard.

These offerings come as the group aspires to be more than just a karaoke provider, added Lu.

“A lot of existing operators have karaoke rooms only, but we offer multi-entertainment concepts,” he noted. Out of the 11 karaoke lounges, four have live-performance halls and two have bistro services and are fitted with their own kitchens.

The group’s live-show venue in shopping mall Bugis+, which accommodates around 500 guests, features live bands and singers. It is open six days a week and serves dinner from Thursdays to Saturdays.

The staff needed for the live performances, including stage directors and other stage-related roles, work full time for Goodwill Entertainment, explained Lu. The shows also feature occasional guest performers, who have to go through auditions to perform at the live shows, he added.

Suitable partners

Alongside enhancing its current offerings, Goodwill Entertainment is also looking to team up with partners. About S$1.3 million in funds raised from the IPO will be used in acquisitions, joint ventures (JVs) and strategic partnerships.

The live show concept in Bugis+, for example, is a collaboration between Goodwill Entertainment and Hezong, a Singapore-incorporated business “experienced in lifestyle and multi-entertainment events”, the company noted in its IPO prospectus.

“The collaboration has strengthened our competitive edge against the current offerings by competitors,” it added.

Another such JV is an upcoming restaurant, Yaki One, slated to open in Suntec City in late November. The venture is a three-way partnership among Goodwill Entertainment, the brand owners of China-based Yaki One, and an existing F&B operator in Singapore that also originated in China.

Lu said that the restaurant, Yaki One, has outlets in China, but needed a local partner to expand into Singapore. This is where Goodwill Entertainment has come in, as it can link overseas brands with local mall owners through its connections.

He noted that the group sees opportunities arising from the differences in the F&B markets in Singapore and other countries, and will look beyond its own brands to capitalise on these chances.

“With these joint-venture opportunities, we get the chance to improve our own manufacturers’ product standards,” said Lu, adding that the group uses the key takeaways from these ventures to enhance its own businesses.

Going abroad

He does not intend to expand within Singapore alone. The group has set its sights on regional markets, with Malaysia as its first intended destination.

About S$1.6 million of the gross proceeds will be put towards regional expansion, said the company.

While Malaysia is a “totally different country”, it has a culture that is similar to Singapore’s due to the Chinese crowd there, pointed out Lu.

The group is on the lookout for a “very strong local partner” from Malaysia with whom to go into a JV, and is in talks with several parties. These parties are interested in the live-show concept, in particular, but Lu believes there is “potential” to bring both the live show and karaoke concepts to Malaysia. That said, the group has not yet firmed up overseas expansion details at this juncture.

Applications for Goodwill Entertainment’s shares close at noon on Nov 13. Its shares are expected to commence trading on a ready basis at 9 am on Nov 15.