Everstone-backed Burger King India defers IPO launch

By Ankit Doshi

  • 16 Mar 2020
Credit: 123RF.com

Burger King India Ltd, which was looking to float an initial public offering later this month, has postponed the launch of its offering because of unfavourable market conditions, two people with direct knowledge of the matter said.

The company, which is backed by private equity firm Everstone Capital, has its IPO approval valid till January 2021 and may launch the offering as and when the market conditions improve, one of the persons said.

The US-based Burger King brand’s India franchisee partner had filed for the IPO in November last year and received regulatory approval in January.

“SBI Cards took a brave call. But it is not sensible to launch (the IPO) in the current situation,” said the person cited above, who is associated with Burger King’s IPO but didn’t want to be named. He was referring to SBI Cards & Payment Services Ltd’s listing on Monday; the credit card issuer’s IPO was covered 26 times but its shares fell on debut.

The person also highlighted the withdrawal of Antony Waste Handling Cell Ltd’s IPO and the deferral of Rossari Biotech Ltd’s IPO.

Rossari Biotech Ltd, India’s largest manufacturer of specialty textile chemicals, was looking to launch an IPO this week but has postponed its plans. Mumbai-based Rossari has SEBI’s approval valid till February 2021.

Concerns over a slowdown in economic growth due to the coronavirus outbreak, the crude oil price war between Saudi Arabia and Russia and the Yes Bank fiasco have all rattled investor confidence in the past two weeks.

Stock markets worldwide have been in a freefall the last few weeks because of the coronavirus pandemic, which has also led policymakers to take drastic measures the world over. The US Federal Reserve on Sunday cut its interest rates to almost zero to support the economy.

Following the Fed, the Bank of Japan said it would double the purchasing limit of exchange-traded funds to 12 trillion Japanese Yen ($112 billion) and was ready to cut interest rates further into negative territory from the current -0.1%.

In the last six trading sessions, the BSE’s benchmark Sensex has lost nearly 18%. US markets opened sharply lower on Monday to touch the lower circuit and trading was halted.

Burger King India

The company owns the right to develop, establish, operate and franchise Burger King-branded restaurants in India.

Everstone Capital, which is the largest private equity investor in the Indian restaurants segment, was looking to partially exit its investment in Burger King India through the IPO.

Everstone, through its investment vehicle QSR Asia Pte Ltd, owns a 99.39% stake in Burger King India. The PE firm had proposed to sell 60 million shares, or nearly a fourth of its stake. Besides the planned stake sale by Everstone, the IPO included a fresh issue of shares worth Rs 400 crore, according to Burger King India’s draft red herring prospectus for the IPO.

The total IPO size was estimated at Rs 1,000 crore ($141 million), two people aware of the matter told VCCircle earlier.

Its directly listed peer Westlife Development – the master franchise for McDonald’s in western and South India – is valued at Rs 5,332.97 crore while pizza chain Jubilant Foodworks Ltd – the franchise for Domino’s – is valued at Rs 18,576.62 crore. In the boarder restaurant segment, Speciality Restaurant is valued at Rs 162.71 crore.

CX Partners-backed Barbeque Nation Hospitality Ltd also refiled its IPO proposal with SEBI last month after its previous approval lapsed due to volatile stock markets.

Burger King is the second-largest burger brand globally as measured by the total number of restaurants, with a global network of over 18,000 restaurants in more than 100 countries and US territories at the end of June 30, 2019.

In India, it had 216 restaurants and eight sub-franchised restaurants as on the date of filing the DRHP.

Kotak Mahindra Capital, CLSA India, Edelweiss Financial Services and JM Financial are part of the syndicate arranging and managing the share sale.