Live-Grill Chain Barbeque Nation Files For IPO
Barbeque Nation has filed its draft prospectus with the market regulator for an initial public offering as it plans to open more outlets of its live-grill restaurant chain and U.S.-based Johnny Rockets fast-food franchise it acquired last year.
Barbeque Nation Hospitality Ltd. is looking to raise Rs 200 crore through a fresh issue and existing shareholders will offload 61.7 lakh shares, according to its draft red herring prospectus filed with the Securities and Exchange Board of India. Investor CX Partner will sell nearly two-thirds of its over 22 percent holding in the company.
Known for its fixed-rate live grill menu, Barbeque Nation is looking to tap into the fast-growing casual dining restaurant business which is projected to grow at 21 percent every year till 2020, according to a report by Technopak cited in the draft prospectus.
Fixed-price casual dining, given its convenience, quick service and moderate average spending, is increasingly popular among customers.Barbeque Nation Hospitality DRHP
The Indian equity market has hit record highs this year, driven by domestic and foreign institutional inflows. That's also spurred demand for initial public offerings. On an average, 16 IPOs have been subscribed 60 times the number of shares on offer so far this year.
Barbeque Nation will use the proceeds of the fresh issue to increase the number of restaurants it operates and reduce its net debt. It has 81 eponymous outlets, of which at least 34 were added in the last two years. It plans to add 36 more by the year to March 2020.
Its subsidiary Prime Gourmet Private Ltd. had acquired rights to the American hamburger brand Johnny Rockets in India. It currently has five outlets in India, while one is under construction. The company intends to add more outlets in metropolitan and tier-1 cities, Barbeque Nation said in the prospectus.
The restaurant chain stands to benefit from this expansion, as under the franchise deal with Johnny Rockets USA, royalty payments would be reduced to 2.5 percent from 5 percent after the first 10 outlets.
Barbeque Nation had a net debt of Rs 63.9 crore as of March, and a debt-to-equity ratio of 0.96. Around Rs 85 crore of the fresh issue will go towards repaying loans.
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