Kimly Makan Place, the wholly-owned subsidiary of Kimly Limited, has entered into a joint venture agreement (JVA) with Tade Group in relation to the operation and management of two short-term HDB coffeeshop leases on April 29.

The coffeeshops in question are located at Blk 233 Bukit Batok East Avenue 5 #01-53 and Blk 153A Serangoon North Avenue 1 #01-462.

They are leased by the joint venture company (JVCo) Zhen Wei Food House.

The JVCo was incorporated by Tade Group on Nov 2, 2020, with an initial issued share capital of $100 comprising 100 ordinary shares.

Following the agreement, the JVCo will allot 147,000 ordinary shares to Kimly Makan Place and 152,900 ordinary shares at a consideration of $1 per share.

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Kimly Makan Place will thereafter hold a 49% stake in the JVCo, while Tade Group will hold the remaining 51%.

The board of directors of the JVCo will comprise two directors with one each being nominated by Kimly Makan Place and Tade Group.

The chairman of the board of directors of the JVCo will be solely appointed by Kimly Makan Place.

SEE:Kimly enters into JV to operate and manage HDB coffeeshops in Bukit Batok and Serangoon

The JVCo will enter into a service agreement with Kimly Makan Place, where the latter will operate and manage both coffeeshops.

The leases of the coffeeshops were originally held by Tade Group.

After the signing of the JVA, new leases with HDB for both coffeeshops have been entered into by the JVCo.

The JVCo is mainly in the business of letting and operating self-owned or leased food courts, coffeeshops and eating houses.

Tade Group is a private company incorporated in Singapore on Jan 21, 2011, and is in the primary business of letting and operating self-owned or leased food courts, coffeeshops and eating houses.

Kimly says its entry into the JVA is in line with its strategy to expand its network of food outlets in Singapore and to establish new food outlets and stalls when suitable strategic locations become available.

It adds that it will be able to “diversify and expand its revenue stream through additional and recurrent rental streams, which mitigates the uncertainties in the private leasing category”.

It expects to open more food stalls under its food retail division complemented by its newly-expanded central kitchen.

Apart from the working capital injection in the JVCo, Kimly Makan Place has also paid Tade Group a lease assignment fee of $588,000 and $1.1 million for the coffeeshops in Bukit Batok and Serangoon, respectively.

As such, the total consideration payable by Kimly Makan Place, including the consideration of $147,000 in the JVCo, is $1.9 million.

The consideration has been fully paid off in cash, which came from Kimly’s IPO proceeds.

Shares in Kimly closed flat at 32 cents on April 29.