Everstone Capital is in advanced talks to sell a 4-5% stake in Burger King India to private equity fund Oman India Joint Investment Fund (OIJIF), for an estimated ₹100-150 crore, weeks after the IPO of the India franchisee partner of the US-based fast-food chain was postponed.
If successful, the transaction could close over the next two weeks, or by mid-April, sources aware of the developments told ET.
Everstone Capital, the Singapore-headquartered India-focused mid-market private equity firm, owns 99.39% stake in Burger King India, through its investment vehicle QSR Asia Pte Ltd.
When contacted, an Everstone spokesperson said there was strong investor interest in Burger King India and that any share sale prior to the IPO would constitute a pre-IPO sale, without specifically referring to its stake sale discussions.
“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,” the spokesperson said in a written response.
Separately, an email addressed to Srinath Srinivasan, chief executive of OIJIF, did not elicit a response till the time of going to press.
Burger King India CEO Raj Verman did not respond to calls or text messages.
Earlier this month, Burger King India postponed the launch of its Rs 1,000 crore initial public offering, in which Everstone was reported to be selling at least a fourth of its stake, after markets globally underwent a meltdown due to the Covid-19 pandemic.
Everstone Capital had secured the exclusive rights to develop and operate Burger King branded restaurants in India in 2013. According to a report by VCCircle, citing sources, Burger King India’s IPO approval is valid till January 2021 and may launch the offering as and when market conditions improve.
“Burger King India is committed to IPO once the markets stabilise. There is no change in our plan for the IPO,” the PE firm’s spokesperson said.
Priced at mass entry-level, Burger King competes directly with market leader McDonald’s. It reported sales of Rs 644 crore in financial year 2018-19 while its losses reduced to ₹16 crore.
OIJIF, which is backed by State General Reserve Fund of Oman, the sovereign wealth fund of Oman, and State Bank of India, is a growth capital private equity fund focused on investing in the mid-market segment in India. It launched its second fund, OIJIF Fund II with a target corpus of $300 million, and announced first closure at $220 million during January 2017.
Reeling from the Covid-19 outbreak, India’s Rs 4.2 lakh crore restaurant sector is staring at store closures, job losses and erosion of profitability.
In a letter addressed to finance minister Nirmala Sitharaman, NRAI president Anurag Katriar has requested restoration of input tax credit, total and immediate deferment of statutory dues inclusive of GST, advance tax payments, PF, customs duties at the central government level and state excise, renewal of liquor licenses, and VAT at the state level for a period of twelve months.
“Any deferment to the deal could be the valuations; the industry is facing severe headwinds,” an industry official who has worked closely with Burger King said.
Last month, burger and fries chain McDonald’s, with its captive mass appeal and aggressive entry-level pricing, had named entrepreneur Sanjeev Agrawal, promoter of Delhi-based MM Agrawal Group, as developmental licensee for its operations in north and east India, nine months after it brought out former partner Vikram Bakshi’s stake in their joint venture.
Source: Economic Times