IPO enthusiasts are going to have a tasty treat coming their way. Renowned quick-service restaurant chain Burger King has finalised the release date of their maiden public issue on December 2. Ahead of the public offering, the restaurant’s share prices have surged 56 percent in the grey market.
Burger King IPOs will launch in the price band of Rs 59-60 to mop up Rs 810 crores from the market.
Burger King IPO might titillate the investors’ taste buds
Burger King has chosen to launch the maiden public offering as the IPO market is warming up once again. The IPO market is currently coming out of the four-month-long sabbatical amid COVID-19 outbreak. Rossari Biotech was the first company in July to test the market, met with an overwhelming response. Since then, several other companies have followed suit with public listings. The ongoing liquidity glut may offer additional assistance to the market to recover faster. There is a fresh inflow of about USD 7 billion in foreign portfolio investment or FII. The recent performance of IPO offers indicates that Burger King IPO is likely to find enthusiastic takers.
Burger King is a fast expanding quick service restaurant in India
Burger King is the Indian subsidiary of the US parent company, promoted by QSR Asia Pte. Ltd. in India.
Burger King is the fastest-growing quick-service restaurant in India with 216 Burger King restaurants and 8 Burger King franchise restaurants in airports. The Indian counterpart has the sole right to establish, operate, and develop restaurants under the brand of Burger King in the USA.
Here are the crucial facts to know about Burger King IPO before it opens this week.
- The initial public offer will contain Rs 450 crores of fresh scrips, and promoter QSR Asia offered to sell six crores offer for sale share amounting to Rs 360 crores on the upper side of the price band
- The company has reserved 10 percent of the total IPO for retail investors, but no employee quota is included in the offer
- Non-institutional and qualified institutional investors receive 15 and 75 percent quota of the shares respectively
- Through pre IPO rights issue allotment, the company has already raised Rs 58.08 crores at a share price of Rs 44 apiece in May 2020.
- In a further preferential allotment initiative, the company raised Rs 91.92 crores at Rs 58.50 per share
- As a result of pre-IPO allotment the actual size of the fresh shares got reduced to Rs 450 from the initial Rs 600 crore IPO offer
- The Burger King IPO date is fixed on December 2, and the subscription window will remain open till December 4
- Investors will have to apply for the minimum lot size of 250 shares and can increase the bid size by the multiple of 250 thereafter
- Burger King IPO issue price is set in the price band of Rs 59-60
- The company will use the funds for expansion purposes of company-owned restaurants and to pay off debt
- The company appointed Kotak Mahindra Capital Company Limited, CLSA India Private Limited, Edelweiss Financial Services Limited and JM Financial Limited to act as book-running lead managers for the offer
- Link Intime India Pvt Ltd. will be the registrar of the offer and will monitor allotment and refund issues
- The IPO shares will debut in both NSE and BSE probably on December 14
Burger King IPO: Should You Hit or Miss?
Will Burger King IPO 2020 be able to entice investors? We will see. But if you’re planning to subscribe, we suggest you weigh all the risk-reward aspects carefully. The company has mentioned in its red herring prospectus that COVID-19 has made a dent in its business. Since March, its sales have reduced significantly to Rs 134.6 crores compared to the pre-COVID sales volume of Rs 419.3 crores during the past six months ending in September 2020.
The company is continuously making losses for the last three years. Since 2018, it has suffered Rs 82.23 crores, Rs 38.27 crores, and Rs 76.57 crores in losses in 2018, 2019, and 2020 respectively, possible reasons behind a growing concern over food-related health issues, an outbreak of an epidemic, and negative-food related incidents.
The company had an initial plan to launch IPO in March but deferred their plan amid COVID condition. Finally, Burger King IPOs will launch in December when the market is turning around for initial public offerings. In 2020, thirteen companies have launched IPOs, and few more are gearing up for now. In the coming days, we will see more popular brands to make a stock market debut.
Burger King has informed that it is mainly looking at expanding its footprint in India by opening more outlets and creating more employment. The company has a plan to have 700 restaurants by the end of December 2026, generating 8,640- 10, 800 new jobs through expansion.
Burger King has a strong presence in north India, followed by west, south, and eastern parts. It is looking to add more depth to solidify its presence in all parts of the country.