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Burger King India is likely to file draft prospectus soon for its INR1,000 crore (INR10 billion) IPO, according to a report by Business Standard. The draft prospectus for Burger King India IPO may be filed this week, said the report citing unnamed people with knowledge of the matter. Burger King is a major player in quick service restaurant (QSR) space in India.
Burger King India IPO will comprise of fresh shares worth INR400 crore for expansion of the restaurant outlets in India. In addition, the IPO is likely to act as an exit route for its private equity investor Everstone Capital. Everstone is expected to offer shares worth INR600 crore through the IPO.
Everstone Capital owns majority equity stake in Burger King India which is responsible for operating restaurants in India and Indonesia. This is in line with Everstone’s investment strategy of backing companies in India and Southeast Asia. Everstone’s other prominent investments include Modern Foods Industries, Hinduja Leyland Finance, OmniActive.
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In the last few years, Everstone has exited some of its portfolio companies through IPO with S Chand and IndoStar Capital Finance. Both stocks had disastrous run on the bourses with S Chand losing 41.5% while IndoStar disappointing with a 37.4% loss of capital in one year post listing. Hinduja Leyland Finance – another portfolio company – had filed IPO prospectus but backed out later.
Burger King India IPO: Knight in the shining armour
Burger King India IPO could very well turn out to be a savior for India’s primary market which has remained subdued so far this year with just 13 listings. Brands with a retail connect tend to resonate better with investors and this was once again highlighted in the roaring success of IRCTC IPO. Burger King has this tremendous advantage and it also helps that its peers Jubilant FoodWorks and Westlife Development – which operate Domino’s Pizza and McDonald’s networks respectively – trade at premium valuations. While Jubilant FoodWorks’ Price to Earnings (PE) ratio stands at 64, Westlife Development trades at three digit multiples.