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 as 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 (i) 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 261(including Company-owned Burger King Restaurants and Sub-Franchised Burger King Restaurants) (ii) Burger King needs to open at least 35 Burger Burger King restaurants per calendar year until the termination of the agreement. (iii) Burger King India has to pay Burger King Asia Pacific, a non-refundable one-time fee on the opening of each Burger King Restaurant of US$ 25,000 for the calendar years 2020 to 2022 and of US$ 35,000 for all periods remaining thereafter until the Agreement remains in effect. (iv) 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. (v) In addition, our Company-owned Burger King Restaurants are required to contribute 5% of sales from Company-owned Burger King restaurants towards marketing and advertising. (vi) The Master Franchise and Development Agreement is valid until December 31, 2039.
The Company had undertaken a Pre-IPO Placement (for cash) by: (I) Rights Issue of 13,200,000 Equity Shares @₹ 44 per equity share amounting to ₹ 580.80 million for their Promoter Selling Shareholder; and (ii) Preferential Allotment of 15,712,820 Equity Shares @₹ 58.50 per equity share amounting to ₹ 919.20 million for AIL. Pursuant to the Pre-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 on 11th December 2020, is represented below:
A
5,050,000,000
-
3,066,546,050
-
1,350,000,000
8,100,000,000
ISSUED, SUBSCRIBED, AND PAID-UP CAPITAL BEFORE THE OFFER
306,654,605 Equity Shares of face value ₹ 10 each
C
Aggregate value at Offer Price
AUTHORISED CAPITAL
505,000,000 Equity Shares of face value of ₹10 each
B
Aggregate value at face value
PRESENT OFFER IN TERMS OF THIS PROSPECTUS
Offer of 135,000,000* Equity Shares
of which
D
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
3,816,546,050
22,899,276,300
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL AFTER THE OFFER
381,654,605 Equity Shares of face value of ₹ 10 each
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
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: 1. Funding roll out of new Company-owned Burger King Restaurants by way of: (i) Repayment or prepayment of outstanding borrowings of our Company obtained for setting up of new Company-owned Burger King Restaurants; and (ii)Capital expenditure incurred for setting up of new Company-owned Burger King Restaurants.
● ●
2. 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
Estimated deployment
funded from the Net Proceeds
Fiscal 2021
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
Fiscal 2022
Fiscal 2023
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 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, 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 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 the 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. Wondering the share price of Burger King IPO after 4days of listing, read more to find out.
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
To read related articles, refer to the below-given articles:
Burger King’s m-cap grows over 3 times in three days Investors of Burger King IPO have earned 3-times profits from the issue price as it reached the upper circuit for three consecutive days. Read more
Mrs. Bectors Food gets Sebi's go-ahead to float Rs 550-cr IPO Mrs. Bectors Food is a leading manufacturer of bakery products and biscuits. The preliminary form for 550Cr IPO was filled. To know more, read here
Welcome Raises $6M to Help your Company Hire and Keep Employees Welcome is an HR software company that recently announced its seed round raised $6 Million. To know the details, click here
Know the Value of Your Business Business valuation is knowing the market value of the business. It can be done in many ways and is useful for various financial purposes...Read more
We, at OpenGrowth, are continually looking for trending startups in the ecosystem. If you want to know any further information about the startup ecosystem or have any mind-boggling ideas, do refer to the other blogs at OpenGrowth.