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McDonald’s franchisee owner Westlife looking to raise up to $172M

12 June, 2013

BL Jatia Group, which runs the master franchisee for the QSR chain McDonald’s in southern and western India under the public-listed company Westlife Development Ltd, is looking to raise up to Rs 1,000 crore through the listed parent, the company said in a stock market disclosure.

The firm passed the decision in an extraordinary general meeting (EGM) last week to raise the fund through various means including a preferential allotment in one or more tranches. The company said Westlife would have to raise funds for expansion of operations, acquisition of equipment, etc.

In February this year, Amit Jatia, vice-chairman of Westlife Development, told VCCircle Westlife runs 155 McDonald’s outlets (at that time) and is planning to increase the number to 250 by 2014. “Typically, we invest Rs 3 crore per restaurant plus there is the cost of real estate. Hence, we plan to spend around Rs 400-500 crore in the next two years,” said Jatia.

The firm opened 32 outlets for the year ended March 31, 2013, the highest in any single year, and said it had spent close to Rs 157 crore.

The group runs a part of the McDonald’s franchise in India through its privately held venture Hardcastle Restaurants. A little over a year ago, a small public-listed real estate group firm, Westlife Development, acquired indirect majority stake in Hardcastle. Earlier this year, Westlife announced an intra-group restructuring, which would make its step-down unit Hardcastle a direct subsidiary of the listed firm. The restructuring would also help the firm in raising capital for further expansion, Jatia told VCCircle in a previous interaction.

Hardcastle is one of the two India franchisees for the McDonald’s chain. The Jatias had acquired their foreign partner in the JV, making it their own venture with a development licensee arrangement. The other unit runs McDonald’s restaurants in northern and eastern regions and is managed by Vikram Bakshi’s Connaught Plaza Restaurants Pvt Ltd, which is still a joint venture with McDonald’s Corporation.

For the year ending March 31, 2013, Westlife clocked revenues of Rs 683.4 crore with net profit of Rs 33.3 crore. Hardcastle, which houses the McDonald’s chain, itself accounted for Rs 681 crore of the overall revenues with a growth of 25 per cent. Its cash profit stood at Rs 62.8 crore with EBITDA of Rs 62.7 crore, which declined 7 per cent over the year-ago period.

(Edited by Sanghamitra Mandal)


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McDonald’s franchisee owner Westlife looking to raise up to $172M

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