Key things to know about Burger King IPO

10 key things to know about Burger King IPO

Quick-service restaurant concatenation Burger King India is set to open its first public issue for subscription on December 2.

The issue will end on December 4 and the listing of equity shares is exacted to be on December 14.

That would be the fourteenth IPO in the contemporary year. Other public issues this time were SBI Card, Route Mobile, Happiest Minds Technologies, Rossari Biotech, Mindspace Business Parks REIT, Angel Broking, Chemcon Speciality Chemicals, Mazagon Dock Shipbuilders, UTI AMC, Computer Age Management Services, Likhitha Infrastructure, Equitas Small Finance Bank and Gland Pharma.

Kotak Mahindra Capital Company, CLSA India, Edelweiss Financial Services, and JM Financial are book encompassing lead administrators to the Burger King issue.

Here are 10 basic things you should know before settling on the issue:

1) About IPO

The public issue consists of a recent issue of Rs 450 crore and an offer for sale of 6 crore equity divisions by promoter QSR Asia.

The fresh issue size was diminished to Rs 450 crore from Rs 600 crore earlier as the company has offered a Pre-IPO placement by way of rights issue of Rs 58.08 crore to promoter exchanging shareholder at Rs 44 per equity share and preferred allotment of Rs 91.92 crore to Amansa Investments for Rs 58.50 per piece.

One can put proposals for a minimum of 250 equity shares and in multiples of 250 equity shares thereafter, which indicates retail investors can apply for a maximum of up to 3,250 equity parts at a higher price band.

2) IPO Price Band

The company in discussion with merchant bankers has a fixed IPO price chain at Rs 59-60 per share, which is 5.9-6 times its face value of equity divisions.

3) Cumulative Fund Raising

Burger King targets to allocate Rs 804 crore at lower price band and Rs 810 crore at higher price band.

4) Objectives of Issue

The company will utilize net new issue interests for funding turn out of owned Burger King Restaurants by way of compensation or prepayment of outstanding borrowings obtained for establishing up of new owned Burger King Restaurants and capital expenditure incurred for setting up of new controlled Burger King Restaurant, and general corporate purposes.

5) Company Sketch

As the national director franchisee of the BURGER KING brand in India, Burger King India has preferential rights to develop, build, operate, and franchise Burger King branded restaurants in India. It is owned by Burger King Corporation, a subsidiary of Restaurant Brands International Inc, which operates a collection of fast-food brands. The Burger King brand is the second most abundant fast-food burger brand globally as measured by the total amount of restaurants, with a global network of 18,675 restaurants in larger than 100 countries and US territories.

As of November 25, Company had 259 held Burger King restaurants and nine sub-franchised Burger King establishments, of which 249 were operational, including two sub-franchised eateries.

6) Financials, Rivals, and Market Share

Its revenue from services grew from Rs 378.1 crore in FY18 to Rs 632.7 crore in FY19 and Rs 841.2 crore in FY20, but it did just Rs 135.2 crore in the first half of FY21 influenced significantly by the COVID-19 crisis.

Besides, although its same-store sales increased at 29.21 percent in FY19 and 6.11 percent in the nine months ended December 2019, same-store sales contracted by 0.30 percent in FY20 and by 56.9 percent in the six months ended September 2020 principally due to the impact of the COVID-19 crisis.

The company proceeded to report losses in last every year but gross margin persisted stable around 63.6 percent in the first half of FY21 against 64.2 percent in FY20 and 63.6 percent in FY19.

The company has availed extension facilities of Rs 210 crore from ICICI Bank to undertake expenditure for opening new eateries and refurbishment of existing restaurants, expenses about the intended initial public offering, and meeting working capital requirements. Of which, the principal prominent was Rs 181 crore as of November 16 this year.

7) Key Concentrations

Burger King believes the following competing strengths will enable it to continue developing the business while delivering value to shareholders:

a) Independent national master franchise rights in India;

b) Strong customer proposal;

c) Brand placed for millennials;

d) Vertically distributed and scalable supply chain

e) Operational quality, a people-centric working culture, and effective technology systems;

f) Well defined establishment roll out and development process;

G) Experienced, strong, and professional management team.

8) Important Strategies

Its strategy is to leverage competing strengths to continue to grow business while surrendering value to shareholders. The company will seek to accomplish this by:

a) Increase the pace of development of restaurant network;

b) Continue to develop on value leadership;

c) Continue to grow brand recognition and loyalty;

d) Actively manage unit economics and achieve economies of scale through operational support;

e) Leverage technologies across industry

9) Promoters

The promoters of Burger King are QSR Asia Pte. Ltd. As of November 25, 2020, the promoter held 28,93,11,110 equity divisions representing 94.34 percent of the paid-up investment capital of the company. 

10) Management

Shivakumar Pullaya Dega is the Chairman and Independent Director, meanwhile Rajeev Varman is the Chief Executive Officer and Whole Time Director.

Shivakumar Pullaya Dega was elected as an Independent Director of the company in October 2019. He is also currently working as the

Group Executive President for corporate strategy and business expansion of Aditya Birla Management Corporation. He beforehand served as the Chairman and Chief Executive Officer of PepsiCo India Holdings and as an MD of Nokia India.

Rajeev Varman, the CEO and Whole Time Director, is responsible for management and operating of business of Burger King both at strategic and operational level and summary innovation in company across all areas including operations and product. He has over 20 years of work experience in food and refreshment industry. 

Amit Manocha, Jaspal Singh Sabharwal, Ajay Kaul, and Peter Perdue are Non-Executive Directors on the provisions, while Sandeep Chaudhary and Tara Subramaniam are Fair Directors.