US-based fast food major Burger King’s India unit has revised its IPO application, raising the size of the proposed public issue to Rs 542 crore, from Rs 400 crore in the original filing of November 2019. Additionally, Burger King India’s promoters have infused another Rs 58 crore into the company by purchasing fresh shares in pre-IPO allotment. Further, the earlier proposed offer for sale (OFS) of existing shares stands unchanged, where promoter QSR Asia will sell 6 crore equity shares.
Earlier, in January this year, Burger King India had received capital markets regulator SEBI’s approval to float its IPO; however, the global market sell-off in March forced Burger King to delay its plans. SEBI has allowed companies till March 31 to change their offer size in view of the pandemic. In line with SEBI’s relaxations, Burger King has increased the size of its fresh issue from Rs 400 crore to Rs 600 crore. This includes the promoters buying 1.32 crore fresh equity shares at Rs 44 apiece for an aggregate of Rs 58 crore, in a pre-IPO rights issue.
The addendum filed with SEBI states that the restaurant chain may undertake another pre-IPO allotment of Rs 92 crore, before filing the RHP with SEBI, which could bring the fresh issue size further down from Rs 542 crore. Pre-issue, promoter QSR Asia holds 26.49 crore equity shares, or 99.39% equity stake in Burger King; while public shareholders hold 16.3 lakh equity shares, or 0.61% stake.
The restaurant chain plans to use the funds from the fresh issue primarily towards setting up of new company-owned restaurants. According to the latest filings, Burger King may use Rs 270 crore in various tranches till financial year 2022. Taking the count of company-owned restaurants to 370 by financial year 2022. It estimates cost per restaurant to be at 2.83 crore. Burger King plans to use Rs 20 crore of the fresh issue proceeds in the current fiscal year. Further, it plans to use Rs 111 crore for opening new restaurants in the next fiscal and the remaining amount in financial year 2022.
Apart from the Rs 270 crore of the fresh issue, Burger King also plans to use Rs 162 crore for the repayment or prepayment of outstanding borrowings of the company obtained for setting up of new Company-owned Burger King Restaurants. According to the DRHP, filed by the firm earlier last year, borrowing till June 2019 stood at Rs 100 crore while all the current liabilities including borrowings were at Rs 225 crore.
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