Burger King IPO Watch: Rs 810 crore issue opens next week; check price band, size, other details

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Updated: Nov 27, 2020 4:26 PM

The promoter selling shareholder QSR Asia could gather Rs 360 crore from the OFS at the higher end of the price band. Pre-offer QSR Asia holds 28.93 crore equity shares or 94.34% of the total share capital.

Burger KingBurger King has undertaken a pre-IPO placement by way of a Rights Issue to Promoter Selling Shareholder worth Rs 58 crore and a preferential allotment worth Rs 91.92 crore.

The much awaited Burger King initial public offering (IPO) will open for subscription next week on December 2 and will close on December 4. The US-based fast-food major’s India unit is offering shares to investors in the price band of Rs 59-60 per share in a lot size of 250 shares and multiples thereafter. The minimum investment that one can make for the issue will be Rs 15,000 on the upper end of the price band. Burger King had earlier in January received SEBI’s nod to float its IPO.

Issue details

The enlarged public issue of Rs 810 crore, consists of a fresh issue of Rs 450 crore and an Offer for Sale (OFS) of 6 crore equity shares by existing shareholders. The promoter selling shareholder QSR Asia could gather Rs 360 crore from the OFS at the higher end of the price band. Pre-offer QSR Asia holds 28.93 crore equity shares or 94.34% of the total share capital. Burger King had earlier in October filed an addendum to the DRHP with SEBI where it had increased the fresh issue size to Rs 600 crore from the Rs 400 crore it had earlier planned in January.

Not less than 75% of the issue will be reserved for Qualified Institutional Buyers (QIB) while only 15% will be reserved for Non-Institutional Investors (NIIs) and merely 10% for retail investors. Ahead of the public issue, Burger King has undertaken a pre-IPO placement by way of a Rights Issue to Promoter Selling Shareholder worth Rs 58 crore and a preferential allotment worth Rs 91.92 crore which has brought the fresh issue size to Rs 450 crore from Rs 600 crore.

Peer comparison

Burger King is the second largest fast food brand globally with a global network of over 18,000 restaurants in more than 100 countries. “Burger King is growing rapidly in India, revenue of the company increased from Rs 230 crore in financial year 2017 to Rs 633 crore in financial year 2019. On the other hand, the company has reduced its losses from Rs 72 crore to Rs 38 crore between the same time period,” said Keshav Lahoti, Associate Equity Analyst, Angel Broking.

However compared to Jubilant FoodWorks, the company that runs the famous Domino’s Pizza chain, Burger King still has some catching up to do. “We believe Burger King won’t get such a premium valuation as Jubilant Foodworks as it does not have a profitability track record like Jubilant, its outlets are young and we believe majority of the Indian people prefers Jubilant – Pizza over burger sold by Burger King,” he added.

Objectives of the issue

With the fresh issue receipts, Burger King plans to add more company-owned stores to its portfolio. According to the addendum filed in October, Burger King had 261 stores at the end of the second quarter of this fiscal. By 2026, Burger King plans to open at least 700 restaurants. Burger King will also use the fund toward repayment or prepayment of outstanding borrowings.

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