Burger King looks to raise Rs 810 crore via IPO

Burger King India, a quick-service chain, on Friday announced that that it planned to raise `810 crore through an initial public offering (IPO). The issue is set to open for subscription on December 2 and will remain open till December 4. The price band per equity share is Rs 59-60.

The IPO will see the fresh issuance of shares worth Rs 450 crore at the same time, the promoter group, QSR Asia will be offering 60 million equity shares worth Rs 360 crore (considering the upper price band). The company stated that it intends to utilise its fresh proceeds by rolling out new company-owned Burger King restaurants by way of repayment or pre-payment of outstanding borrowings of the company, for capital expenditure and general corporate purposes.

The book running lead managers to the issue are Kotak Mahindra Capital Company, CLSA India, Edelweiss Financial Services, and JM Financial. The company’s shares would be listed on the NSE and BSE. Rajeev Varman, chief executive officer and whole time director, Burger King India, said that the brand had entered India at the right time. He said, “This is the time where real estate is developing, the market, out-of-home eating is developing and this is the time where technology is coming with the best application in retail. I think we came in at a very good time and have a great road ahead.” He also stated that in India the footprint of QSRs is mostly regional and national players are very few so, there is massive opportunity in the market. According to him, the majority of the market is unorganised and slowly moving but rapidly going towards becoming more organised.

Burger King India with the help of their master franchisee arrangement has the ability to use Burger King’s globally recognised brand name to grow its business in India.

When compared to its competitor Jubilant Foodworks, market experts believe that the company is unlikely to get premium valuations, however, they see growth potential in the company going forward. Keshav Lahoti, associate equity analyst, Angel Broking, said, “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. So looking at the valuation and the growth the company is expected to do in the future, the issue is looking attractive to us at the first look.”