Restaurant chain Barbeque Nation Hospitality Ltd (BNHL) has received the Securities and Exchange Board of India nod to float an initial public offering.
The casual-dining chain, backed by home-grown private equity firm CX Partners, received final observations on 5 January. With this, BNHL becomes the first to receive regulatory clearance in 2018.
As many as 46 firms had received clearance for IPOs in 2017, according to SEBI’s website.
BNHL will join about a dozen companies that have valid SEBI nod to launch IPOs. The firm had filed its draft documents in August for an issue size estimated at Rs 700-900 crore ($109-140 million then).
BNHL’s IPO will become the first public offering by a restaurant chain in nearly six years. SAIF Partners-backed fine dining chain operator Speciality Restaurants Ltd, which also runs 62 food & beverages outlets in India, including popular brands such as Mainland China, Oh! Calcutta and Sweet Bengal, went public in May 2012.
Kolkata-based Speciality Restaurants had mobilised over Rs 175 crore and joined other listed peers such as Domino’s Pizza India licensee -- Jubilant Foodworks Ltd and McDonalds India licensee -- Hardcastle Restaurants Pvt. Ltd.
The company’s IPO plans had hit regulatory hurdles. SEBI had kept the issue “in abeyance pending regulatory action for past violation” in October last year.
BNHL had highlighted a few past violations as risk factors in its draft red herring prospectus. Sayaji Hotels Ltd, one of the promoters of Barbeque Nation, had failed to comply with SEBI’s minimum 25% public float requirement and also separately violated regulations on insider trading and takeovers. The hotel company’s promoters, Kayum Dhanani and members of the Dhanani family, are also promoters of Barbeque Nation.
According to the draft prospectus, Sayaji Hotels had not complied with the minimum public shareholding requirement and SEBI had referred the matter of the delay in compliance for adjudication.
The IPO comprises a fresh issue of shares worth Rs 200 crore besides a secondary market offering of 6.18 million shares by promoter and managing director Kayum Dhanani, certain members of the Dhanani family and private equity backer CX Partners.
Home-grown CX Partners will sell a bulk of its holding in the company, as per the draft prospectus. The public offer will result in a 31-32% stake dilution on a post-offer basis.
The offering will likely value the Bengaluru-based restaurant chain at Rs 2,000-2,200 crore, as per VCCircle estimates.
IIFL Holdings, Edelweiss Financial Services, Jefferies India and SBI Capital Markets are merchant bankers to the IPO.
The restaurant chain was founded in 2006 and had 81 outlets across the country as on 31 March 2017, according to the draft prospectus. It has one restaurant in Dubai and has also granted franchise rights for one of its Barbeque Nation restaurants.
It offers cuisines including Mediterranean, American, Asian and Indian, and also allows customers a hand in cooking their own food through its ‘Do-It-Yourself’ concept.
BNHL’s expansion route
VCCircle reported in September 2016 that the company acquired the master franchise rights for American burger chain Johnny Rockets in India in an all-cash deal.
BNHL paid Rs 17 crore ($2.5 million) to buy the entire business of Johnny Rockets from Prime Gourmet. The Johnny Rockets deal will help BNHL add a quick service restaurant (QSR) format to its portfolio and boost its operations in Delhi-NCR.
The company is aiming to strike some other deals ahead of its listing.