Burger King India gets SEBI's green signal to float IPO

The Securities and Exchange Board of India (SEBI) has given approval to Burger King India Ltd, the national master franchisee of the American burger brand in India, to float its initial public offering (IPO).

Burger King’s total IPO size is estimated at Rs 1,000 crore. The proposed IPO will be involving private equity firm Everstone selling a quarter of its shares and the burger chain issuing fresh shares worth Rs 400 crore.

The QSR chain will utilize Rs 290 crore out of the fresh net proceeds to launch new company-owned restaurants and part of the money for general corporate purposes. Currently, it has 216 restaurants and eight sub-franchised restaurants across India.

Burger King had filed its documents for the proposed IPO in November 2019.

Everstone is poised to make neat returns from the partial exit. The company, through its investment vehicle QSR Asia Pte Ltd, owns a 99.39% stake in Burger King India.

In 2014, Everstone had formed a rare investment unit to build and operate a brand from scratch in India. Despite investing in a bunch of restaurant chains, Everstone didn’t succeed in making money from all of its bets. However, the firm is looking to more than makeup with Burger King. It has proposed to sell 60 million shares, or nearly a fourth of its stake.

Footprint of Burger King

The brand is owned by Burger King Corporation, a subsidiary of Restaurant Brands International Inc, in the US. Restaurant Brands International Inc holds a portfolio of fast-food brands that also include Popeyes and Tim Hortons.

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

Burger King India will be valued at Rs 3,065 crore, based on the estimated issue size. The brand’s listed peers Westlife Development, the master franchisee for McDonald’s in western and South India, is valued at Rs 6,751 crore, while Jubilant Foodworks Ltd, the franchise for Domino’s, is valued at Rs 24,063 crore.

Business Growth

Burger King’s loss narrowed to Rs 38.55 crore for the year through March 2019 from Rs 81.47 crore the year before. Its revenue from operations jumped to Rs 632.73 crore from Rs 378.12 crore.

The burger chain’s loss for the three months ended June 2019 was Rs 2.14 crore on revenue of Rs 212.27 crore. Its same-store sales growth, a key measure of operating performance, was 12.23% and 29.21% in 2017-18 and 2018-19, respectively.