Burger King India Ltd, the national master franchisee of the American burger brand in India, has received a green signal from the Securities and Exchange Board of India to float its initial public offering (IPO).
SEBI issued its final observations on Burger King India’s IPO proposal on January 24, according to the capital markets regulator’s website.
The proposed IPO will involve private equity firm Everstone selling a quarter of its shares and the burger chain issuing fresh shares worth Rs 400 crore. The total IPO size is estimated at Rs 1,000 crore ($141 million), two people aware of the matter had told VCCircle earlier.
The company will use Rs 290 crore out of the fresh net proceeds to roll out new company-owned restaurants and part of the money for general corporate purposes. The burger chain had filed its documents for the proposed IPO last November. At the time, it had 216 restaurants and eight sub-franchised restarants across India.
Everstone is poised to make neat returns from the partial exit. (Click here for details on annualised returns and whether the PE firm will beat the benchmark.)
Everstone, through its investment vehicle QSR Asia Pte Ltd, owns a 99.39% stake in Burger King India. It had formed a rare investment unit to build and operate a brand from scratch in India in 2014.
Although Everstone has invested in a bunch of restaurant chains, it didn’t succeed in making money from all of its bets. However, it is looking to more than make up with Burger King. The PE firm has proposed to sell 60 million shares, or nearly a fourth of its stake.
In the US, the brand is owned by Burger King Corporation, a subsidiary of Restaurant Brands International Inc., which holds a portfolio of fast-food brands that also include Popeyes and Tim Hortons.
Burger King is the second-largest burger brand globally as measured by the total number of restaurants; it had a global network of over 18,000 restaurants in more than 100 countries and US territories at the end of June 30, 2019.
Based on the estimated issue size, Burger King India will be valued at Rs 3,065 crore. Its directly listed peers Westlife Development – master franchise for McDonald’s in western and South India – is valued at Rs 6,751 crore while pizza chain Jubilant Foodworks Ltd – the franchise for Domino’s – is valued at Rs 24,063 crore. For more details on how Burger King is stacked up against its peers in terms of asking valuation, click here.
The company’s loss narrowed to Rs 38.55 crore for the year through March 2019 from Rs 81.47 crore the year before. Revenue from operations jumped to Rs 632.73 crore from Rs 378.12 crore.
Its loss for the three months ended June 2019 was Rs 2.14 crore on revenue of Rs 212.27 crore.
The company’s same-store sales growth—a key measure of operating performance—was 12.23% and 29.21% in 2017-18 and 2018-19, respectively.