Rakesh Jhunjhunwala’s Alchemy Capital has decided against selling its stake in Barbeque Nation through an Offer for Sale (OFS) as the restaurant chain once again plans to go public.
Rakesh Jhunjhunwala’s Alchemy Capital has decided against selling its stake in Barbeque Nation through an Offer for Sale (OFS) as the restaurant chain once again plans to go public. In the second addendum, filed by Barbeque Nation with capital markets regulator SEBI earlier this month, the company has trimmed the OFS size and announced that it has undertaken a pre-IPO placement, reducing the number of shares investors can bid through the IPO, when it hits Dalal Street. Barbeque Nation has been attempting to get listed on the bourses since 2017 but its plans have so far not fructified.
Rakesh Jhunjhunwala decides to stay invested
Earlier, prior to the coronavirus pandemic, Barbeque Nation had planned to raise Rs 275 crore through a fresh issue of equity shares while existing investors were selling 98,22,947 equity shares. In the addendum filed with SEBI, Barbeque Nation now plans to raise Rs 180 crore through the fresh issue and existing shareholders are looking to sell just 54,57,470 equity shares. Kayum Dhanani, Zoya Dhanani, Pace Private Limited and Alchemy India Long Term Fund Limited have decided to withdraw as selling shareholders from the offer. Promoter SHKSL has decided to increase the number of equity shares in the offer for sale. Rakesh Jhunjhunwala’s Alchemy Capital had earlier planned to sell 3 lakh equity shares.
Marquee names walk in pre-IPO
The addendum informed that Barbeque Nation has undertaken a pre-IPO placement of 59,51,132 equity shares for an aggregate amount equal to approximately Rs 149.9 crore. Done in various transactions, all the pre-IPO placements were preferential allotments issued at Rs 252 per share. This has helped Barbeque Nation rope in key investors into the firm.
“Xponentia and CX partners recently picked 6.2% stake while Jubilant Foodworks picked up 10.8% stake in Barbeque Nation,” Divam Sharma, Co-founder at SEBI Regd Green Portfolio Management Services told Financial Express Online. “This is highly positive for the company as names like Jubilant brings in lots of strategic value to the company. The pre-IPO placement has resulted in the reduction of the fresh issue size,” he added. The Decision by investors to not exit through the OFS, indicates that they are looking to make larger gains by continuing to stay invested, according to Divam Sharma.
Debt repayment strategy changed
Barbeque Nation has also changed its offer objective in the addendum. Now, the restaurant chain is looking to raise Rs 54.6 for expansion and opening of new restaurants and Rs 75 crore for pre-payment or re-payment of debt. Barbeque Nation could now be looking to trim its debt further in the future against an immediate repayment, according to Amarjeet Maurya – AVP – Mid Caps, Angel Broking.
Barbeque Nation compares well with its currently listed peers. “Jubilant FoodWorks is trading at an ROE of 25%, Westlife LifeDevelopment is making an REO of 3-4% based on the Financial year 2019 numbers while Burger King is in the negative,” said Amarjeet Maurya. According to his calculations, Barbeque Nation’s ROE based on financial year 2019 numbers stood at 11%. “I think Barbeque Nation could get good valuations and listing, seeing the response Burger King’s IPO got earlier,” he added.