Burger King India to raise US$56.6m in IPO to accelerate expansion

INDIA – Burger King India has filed for an Initial Public Offering (IPO) that could to raise up to INR4 billion (US$56.6 million) as the fast food chain seeks to accelerate its expansion in the country.

Five years after launching in the country, the Indian unit of the American restaurant chain plans to list with the Bombay Stock Exchange (BSE) as well as the National Stock Exchange (NSE), Reuters reported.

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According to the company’s IPO papers, the public offering includes an offer for sale of up to 60 million equity shares by QSR Asia PTE, which owns 99% of the Indian entity. However, the company did not disclose pricing details.

Everstone Capital, the private equity firm which operates Burger King India, is said to be considering a private placement of shares worth INR1.5 billion (US$ 21.23 million) ahead of the IPO.

The IPO is being managed by investment bankers; Edelweiss Financial Services, Kotak Mahindra Capital, JM Financial, and CLSA India.

Burger King India plans to use INR2.9 billion (US$41.05 million) of the proceeds raised to open new restaurants. With an average ticket value of INR500-550, the quick service restaurant chain had 202 outlets in 47 cities as of June 30 this year.

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The fast food chain intends to have 325 stores by 2020 in an effort to rival the category leader in burger & sandwiches, McDonald’s, which has about 470 outlets, according to data by consulting firm Technopak Advisors.

McDonald’s controls close to 42 per cent market share in the category and has exhibited impressive revenue growth at a compounded annual growth rate (CAGR) of 19 per cent.

The category has outpaced the growth of market leader due to entry of newer players such as Burger King and Wat-a-burger among others.

In the Year to end March 2019, Burger King India posted a 66% growth in sales and significantly narrowed losses on the back of aggressive expansion, entry level pricing and largest vegetarian menu within global quick service restaurant chains.

During the year, Burger King sales in India almost doubled its sales to Rs 644 crore (US$91.15m) while its losses reduced to Rs 16 crore ($2.26m) from the previous year’s sales of Rs 389 crore ($55.06m) and a net loss of Rs 63 crore ($8.92m).

For Burger King, India has been the fastest growing market in terms of store expansion. The brand recently received a fresh capital infusion of Rs 45 crore ($6.37m) and a loan facility of Rs 150 crore ($21.23m) from parent Everstone Group.

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