With its initial public offering (IPO) plans impacted by the coronavirus (COVID-19) pandemic induced market crash, Everstone Capital backed-fast food chain Burger King India Ltd has been engaged in talks to raise around Rs100-150 crore from private equity funds, said two people aware of the development.
Burger King India was planning to launch its IPO later this month and had filed the red herring prospectus with the registrar of companies on 11 March. The market crash following the rapid global spread of COVID-19 forced the company to defer the public offer temporarily.
Burger King India was planning to raise around ₹480 crore in primary capital, for loan repayments, expanding its store network, the RHP filed by the company shows. Its promoter —QSR Asia Pte Ltd, planned to sell a part of its stake in the company through the IPO. Collectively, the share was supposed to be worth over ₹1,000 crore. QSR Asia is owned by private equity firm Everstone.
With the IPO now temporarily pushed back, the company has been engaged in talks with private equity firms to raise capital till the time markets stabilize and consumer demand returns to normal, said one of the people cited above, requesting anonymity.
"They are in talks with PE funds including Oman India Joint Investment Fund (OIJIF) for raising ₹10 crore or more, which will be used for store expansion and loan repayments. They have an annual mandate to expand their store network to a certain number and they need quite a bit of capital to set up these company owned stores," said the other person cited above, also requesting anonymity.
According to the draft prospectus filed by the company in November, Burger King India had 216 company-owned restaurants and eight sub-franchised restaurants across 47 cities in India, including Delhi-NCR, Mumbai, Pune, Chennai, Hyderabad, Bengaluru, Chandigarh, Ludhiana, Amritsar and Kochi.
"Burger King India evinced strong response to its growth story and positioning during the recent IPO roadshows including requests for Pre IPO and anchor. Despite the current situation, there continues to be strong interest. Any sale prior to IPO would be a Pre IPO sale and not a PE stake sale. Burger King India is committed to IPO once the markets stabilize. There is no change in our plan for the IPO," said a spokesperson for Eversrtone.
Emails sent to OIJIF did not elicit a response.
Burger King India's revenue from sale of food and beverages nearly doubled to ₹633 crore, on yearly basis, in FY19. Its same store sales grew 29% in the given period and losses reduced to ₹38 crore from ₹82 crore in FY18.
Burger King India is not the only company whose IPO plans have been impacted by COVID-19.
Specialty chemicals maker Rossari Biotech Ltd which was planning to launch its IPO in the same week as Burger King India has also deferred its plans, according to a Mint report. Antony Waste Handling Cell Ltd, which had opened its initial share sale on 4 March, had to withdraw the public offering after it failed to attract enough investor interest in volatile markets, despite having extended the IPO beyond its original three-day period.