Fast-food major Burger King India is looking to go public next year. And with this move, private equity player Everstone Capital, which owns a majority stake in the quick service restaurant (QSR) chain, will be looking to make at least a partial exit. Sources in the know told The Business Standard that the company will file a document for an initial public offer (IPO) this week with the Securities and Exchange Board of India (SEBI).
The issue will comprise a secondary share sale worth Rs 600 crore by Everstone Capital and fresh fundraising worth Rs 400 crore, which will be used to fuel the fast food chain's expansion plan. It currently operates around 200 outlets in India and had reported a 66 per cent jump in sales (y-o-y) to Rs 389 crore in FY18 -- the latest available results -- overtaking Domino's Pizza, Starbucks, Pizza Hut and Dunkin' Donuts. However, losses had reportedly widened to Rs 62 crore from Rs 57 crore in FY17.
Edelweiss, Kotak Mahindra Capital, JM Financial, and CLSA are the investment bankers managing the Burger King IPO. If the regulatory approval process to clear the draft red herring prospectus concludes in the typical time frame of 4-6 weeks, Burger King India could get listed early next year. Arch rivals in the QSR space, Jubilant FoodWorks -- the operator of the Domino's chain in India -- and Westlife Development, which runs McDonald's outlets in the southern and western regions, went public much earlier and now trade at high price-to-earnings multiples.
According to industry insiders, thanks to the investor preference for consumer-oriented brands, Burger King India could not only command attractive valuations but also infuse life into the sluggish IPO market. A total of 13 companies came out with IPOs in this calendar year, a dip of 45 per cent y-o-y, while the total amount raised shrunk 188 per cent to Rs 10,717 crore in 2019.
The good news is that 70 per cent of the new entrants are trading well above their issue prices, giving returns of up to 95 per cent to shareholders.
With PTI inputs