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GS Holdings unit forms JV to grow F&B businesses

GS Holdings announced on Thursday that its indirect wholly-owned subsidiary, Hao Kou Wei, has entered into a joint venture (JV) agreement with an individual, Xing Zhiyuan, to expand its businesses in the food and beverage (F&B) industry.

The JV company has an existing issued and paid-up share capital of S$20,000, comprising 20,000 ordinary shares.

Mr Xing is a Chinese citizen and a businessman with extensive experience in the F&B industry, said the group in a regulatory update. He has, through his holding companies, established several brands. Among them are the cafe chain Email Coffee, with 560 outlets, and Yomie Yoghurt, which has expanded to about 860 outlets in 43 countries, including Singapore.

He was introduced to the executive director and chief executive officer of GS Holdings Pang Pok by the group's former head of its Food and Beverage Division.

Mr Xing does not presently hold shares in the capital of the company directly or indirectly, and is not related to any directors or substantial shareholders of the company, said GS Holdings.

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The JV company will principally be engaged in the business of developing, franchising and managing of various F&B brands. These include the central procurement of contractors, equipment, payment systems, supplies, services, utensils and other related products and services.

The business will be primarily carried out in Singapore, but F&B brands developed may be sold and/or franchised locally and overseas.

Under the JV agreement, Hao Kou Wei will subscribe for new shares in the JV company, after which it will hold an 51 per cent stake; the JV partner will hold the other 49 per cent.

The consideration for the subscription of shares is S$10,200, which will be satisfied fully in cash, and will be funded by internal sources of funds.

As the JV company has just been incorporated and has neither commenced operations nor owns assets, the book value and net tangible asset value of the subscription shares are zero. No valuation of the subscription shares has been commissioned.

GS Holdings said that the JV is beneficial to the group as it will facilitate its expansion of its F&B business and the development of new F&B brands for regional franchising for a relatively small investment. The JV will also facilitate the creation and development of approximately 10 of the group's new F&B brands.

GS Holdings added: "In addition, by leveraging the strong network, experience and expertise of the JV partner in respect of the F&B business and in particular, franchising, Hao Kou Wei's entry into the JV agreement provides a strategic platform for the group to execute its expansion plans in respect of F&B brands development."

Shares of GS Holdings last traded on Sept 14 at S$0.57.

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