Burger King IPO: 10 key things to know about the issue

Burger King India is set to open its Rs 810-crore initial public offering (IPO) on Wednesday, December 2, 2020. The share sale will end on Friday, December 4, 2020. This would be the fourteenth IPO in the current year.  

Here are 10 key things you should know before the issue opens:

1. The price band of IPO has been fixed at Rs 59 to Rs 60 per equity share. Bid lot size is of 250 shares and in multiple of 250 shares thereafter. Burger King plans to raise Rs 804 crore at lower end of price band and Rs 810 crore at higher end of price band. The grey market premium (GMP) for the stock has shot up to 40% of the IPO price. Post allotment, shares will be listed on BSE and NSE. Burger King listing is likely by December 14. The issue constitutes 35.37% of the post issue paid-up capital of the company.

2. The initial public offer (IPO) comprises a fresh issue of Rs 450 crore and an offer for sale by the promoter entity, QSR Asia Pte Ltd, of 6 crore shares worth Rs 360 crore at the upper end of the band.  The company will not receive any proceeds from the offer for sale. The OFS proceeds will go to the promoter selling shareholder.

3. Burger King India conducted the pre-IPO placement of Rs 150 crore through a rights issue of 1.32 lakh shares at Rs 44 each (amounting to Rs 58 crore) and preferential allotment of 1.57 crore shares at a price of Rs 58.50 to Amansa Investments Limited, amounting to Rs 92 crore.

4. Fundraising through the IPO will largely be utilised for repaying a portion of its existing debt, meet the general corporate purpose, and expanding its store base in India. The company has reserved 75% of the issue for QIBs, 15% for HNIs, and 10% for retail investors. BKIL is looking for a market cap of approximately Rs 2,290 crore post this issue.

5. BKIL has 200 plus stores in less than 5 years of existence in the country with an objective to provide greater convenience and accessibility. Historically, the chain is situated in 6 clusters within India's high footfall areas, such as metro stations. Burger King India has exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India.

6. Burger King India Limited (BKIL), the national master franchisee of the Burger King brand in the country, is one of the fastest-growing international Quick Service Restaurants (QSR) chains in India with 261 stores as of September 20. BKIL has a 5% market share in India's Rs 34,800 crore QSR market.

7. Burger King India said in its red herring prospectus that the COVID-19 outbreak had a substantial impact on its operations since the last week of March. By the end of March 2020, the company temporarily shut 201 restaurants. However, by April 1, 2020, 130 restaurants reopened for operation. As of September 20, the company has a total of 261 restaurants running across the country. Further, due to the COVID-19 pandemic, the company's sales decreased in the six months ended September 30, 2020, to Rs 134.6 crore compared to Rs 419.3 crore in the six months ended September 30, 2019.  According to its DRHP, the second half of FY2021 is expected to be better than H1 as most cities have removed restrictions.

8. Key challenges/risks to growth for BKIL include unavoidable events (such as the COVId-19 pandemic environment), slowdown in the macro environment, higher real estate prices, and regulatory hurdles, which are likely to impact business fundamentals of QSR companies. The sudden change in lifestyle and awareness of healthy food habits to survive in the pandemic is also a big concern for this chain of stores.

9. As per offer documents, BKIL has shown Jubilant Foodworks and Westlife Developments as its listed peers. Domino's total outlet count in India is 1,354, followed by Subway (54), McDonald's (481), KFC (454), Wow! Momo (317), and Burger King (261).

10. The initial share-sale is being managed by Kotak Mahindra Capital Company, CLSA India, Edelweiss Financial Services, and JM Financial. While Link Intime India Pvt. Ltd. is the registrar to the issue. Those who would bid for the issue can check the subscription status on linktime the online portal of Link Intime India Private Limited.

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