Looks like Santa came early this year for India!
Burger King is a quick-service restaurant(QSR) chain that is popular worldwide. Burger King has entered India in 2014, pretty late compared to their competitors like McDonald's, Pizza Hut, and Domino's Pizza who entered India in the late 1990s.
But they are one of the fastest-growing international QSR chains in India during the first five years of their operations based on the number of restaurants. (Source: Technopak)
As of 30th September 2020, the national master franchisee of the Burger King brand in India is the second-largest food burger brand globally based on the total number of restaurants.
Burger King India is owned by QSR Asia. QSR Asia has exclusive rights to develop, establish, operate, and franchise Burger King branded restaurants in India. This means they can add new food offerings according to Indian tastes and preferences.
Now, let's dive into the details:
Significant Terms of Agreement for Rights Acquired
- As per the Agreement, Burger King India is obligated to develop and open at least 700 restaurants (including Company-owned Burger King Restaurants and Sub-Franchised Burger King Restaurants) by December 31, 2026. The condition is that at all times, Company-owned Burger King Restaurants should represent 60% of the total number of Company-owned and Sub-Franchised Burger King Restaurants in India.
As of 11th December 2020, the total number of operational restaurants are 249(including Company-owned Burger King Restaurants and Sub-Franchised Burger King Restaurants)
- Burger King needs to open at least 35 Burger King restaurants per calendar year until the termination of the agreement Burger King India has to pay Burger King Asia Pacific, a non-refundable one-time fee on the opening of each Burger King Restaurant.
- US$ 25,000 for the calendar years 2020 to 2022 and US$ 35,000 for all periods remaining thereafter until the Agreement remains in effect.
- Apart from the one-time fee, Burger King India has to pay a monthly royalty fee that ranges from 2.5% to 5% of sales.
- In addition, the Company-owned Burger King Restaurants are required to contribute 5% of sales towards marketing and advertising.
- The Master Franchise and Development Agreement is valid until December 31, 2039.
The Company had undertaken a Pre- tech IPO Placement(for cash) by:
- Rights Issue of 13,200,000 Equity Shares @₹ 44 per equity share amounting to ₹ 580.80 million for their Promoter Selling Shareholder; and
- Preferential Allotment of 15,712,820 Equity Shares @₹ 58.50 per equity share amounting to ₹ 919.20 million for AIL.
Pursuant to the Pre- tech-ipo Placement, the size of the fresh issue of ₹ 6,000 million had been reduced by ₹ 1,500 million, and accordingly, the fresh issue size was ₹ 4,500 million.
Capital Structure
The Equity Share capital of the Company as of 11th December 2020, is represented below:
|
|
|
Aggregate value at face value |
Aggregate value at Offer Price |
|
A |
AUTHORISED CAPITAL |
|
|
|
|
505,000,000 Equity Shares of face value of ₹10 each |
5,050,000,000 |
- |
|
B |
ISSUED, SUBSCRIBED, AND PAID-UP CAPITAL BEFORE THE OFFER |
|
|
|
|
306,654,605 Equity Shares of face value ₹ 10 each |
3,066,546,050 |
- |
|
C |
PRESENT OFFER IN TERMS OF THIS PROSPECTUS |
|
|
|
|
Offer of 135,000,000* Equity Shares |
1,350,000,000 |
8,100,000,000 |
|
|
of which |
|
|
|
|
Fresh Issue of 75,000,000 Equity Shares |
750,000,000 |
4,500,000,000 |
|
|
Offer for Sale of 60,000,000 Equity Shares |
600,000,000 |
3,600,000,000 |
|
D |
ISSUED, SUBSCRIBED, AND PAID-UP CAPITAL AFTER THE OFFER |
|
|
|
|
381,654,605 Equity Shares of face value of ₹ 10 each |
3,816,546,050 |
22,899,276,300 |
|
E |
SECURITIES PREMIUM ACCOUNT |
|
|
|
|
Before the Offer |
|
4,571,953,920 |
|
|
After the Offer |
|
8,321,953,920 |
To read the final prospectus submitted by Burger King to SEBI on 11th December 2020, click here
Burger King IPO Details
This is a 100% Book Built Offer
|
IPO Opening Date |
December 02, 2020 |
|
IPO Closing Date |
December 04, 2020 |
|
Listing At |
BSE, NSE |
|
Face Value of a share |
₹ 10/ equity share |
|
IPO Price Band |
₹ 59-60/ equity share |
|
Minimum Order Quantity |
250 shares |
|
Market Lot Size |
250 shares (1 Lot = 250 shares = Minimum Quantity) |
|
Maximum Order Quantity |
3250 shares (13 lots) |
Burger King IPO Timetable
|
IPO Open Date |
December 2, 220 |
|
IPO Close Date |
December 4, 2020 |
|
Basis of Allotment Date |
December 9, 2020 |
|
Initiation of Refunds |
December 10, 2020 |
|
A credit of Shares to Demat Account |
December 11, 2020 |
|
IPO Listing Date |
December 14, 2020 |
Objects of the Offer
-
The Net Proceeds from the Fresh Issue are proposed to be utilized in the following manner:
-
Funding roll out of new Company-owned Burger King Restaurants by way of:
Repayment or prepayment of outstanding borrowings of the Company obtained for setting up of new Company-owned Burger King Restaurants; and
Capital expenditure incurred for setting up of new Company-owned Burger King Restaurants.
General corporate purposes*
-
Offer related expenses concerning the Fresh Issue amounted to ₹ 368.51 million
-
Schedule of Implementation and Deployment of Net Proceeds
(In ₹ million)
|
Particulars |
Amount to be funded from the Net Proceeds |
Estimated Deployment |
||
|
Fiscal 2021 |
Fiscal 2022 |
Fiscal 2023 |
||
|
Funding roll out of new Company-owned Burger King Restaurants |
3,419.79 |
1,789.79 |
1,110.00 |
520.00 |
|
(i) Repayment or prepayment of outstanding borrowings of our Company obtained for setting up of new Company-owned Burger King Restaurants; and |
1,649.79 |
1,649.79 |
- |
- |
|
(ii) Capital expenditure incurred for setting up of new Company-owned Burger King Restaurants |
1,770.00 |
140.00 |
1,110.00 |
520.00 |
|
General corporate purposes |
711.70 |
400.00 |
311.70 |
- |
|
Total |
4,131.49 |
2,189.79 |
1,421.70 |
520.00 |
*The amount utilized for general corporate purposes shall not exceed 25% of the Net Proceeds.
IPO Subscription Day
ET reported, “The Rs 8100 million IPO share allotments of Burger King got a strong response from investors. It was fully subscribed within a few hours of opening for subscription on December 2. The IPO share allotment, priced at Rs 59-Rs 60, was subscribed over 156 times. The QIB portion was subscribed 86.6 times, non-institutional investors’ quota was subscribed 354.1 times, and retail individual investors’ bid for 68.1 times the number of shares set aside for them.”
According to the data available on the stock exchanges, the IPO share allotment received bids for 116.6 million equity shares which are 156 times against the IPO size of 74.5 million equity shares.
IPO Listing Day
Shares of Burger King made a powerful entry on Stock Exchanges on Monday, 14th December 2020
On BSE, the share got listed at Rs 115.35, gaining a 92.25% premium over the issue price of Rs 60 making it the fourth-best listing in 2020. Closing at Rs 138.40 i.e a 130% premium over its issue price.
ET says, “This has been the strongest closing on a listing day since December 2017, when Astron Paper & Board Mill ended up 139.4 percent over its issue price on its listing day on December 29, 2017”
On NSE, the share debuted at Rs 112.50, earning an 87.5% premium over the issue price. At closing, the share rose to 125% at Rs 135. About 7.78 crore shares were traded on that day on NSE.
Market Share in Fiscal Year 2020
By Number Of Outlets
Domino’s Pizza- 19%, Subway- 8%, McDonald’s- 7%, KFC- 6%, Burger King- 4%
In Terms Of Sales Revenue
Domino’s Pizza- 21%, McDonald’s- 11%, KFC- 10%, Subway- 6%, Burger King- 5%
Competitive Strengths of Burger King:
- Strong franchisee model
- Negative working capital
- Market share gains from standalone players
- Strong store expansion plans
Burger King, being a relatively new entrant as compared to other international QSR companies has become a prominent player in the sub-segment especially by increasing its number of outlets in the shortest span of time.
Let us know your views in the comment section below
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