Devyani International, the largest India franchisee for Pizza Hut and KFC restaurants, has filed draft papers for an initial public offering (IPO).
The IPO will raise Rs 400 crore (about $55 million) in a fresh issue. Moreover, promoter group entity and Singapore state investor Temasek Holdings will sell around 125 million shares via the offering.
VCCircle had reported in April that the firm was in the final stage of preparation to float itself in a move that could offer a partial exit to Temasek.
The total IPO size will be sized at Rs 1,400-1,500 crore (Rs 400 crore of fresh shares plus the sale of equity by shareholders accounting for the rest) and will value Devyani at Rs 10,000-10,500 crore, two sources said.
Temasek is selling 5.91% of its 14.05% stake in the proposed IPO. The investor, which pumped about Rs 400 crore in two tranches in late 2014, is likely to pocket about Rs 550-575 crore from the partial exit, as per the sources.
After the IPO, Temasek will own 8.14% stake that will be worth around Rs 850 crore.
Kotak Mahindra Capital, CLSA India, Edelweiss Financial Services, and Motilal Oswal Investment Advisors are the merchant bankers managing Devyani the public issue.
VCCircle had reported in late 2019 that Devyani was gearing up for its float and had even hired merchant bankers.
The sources mentioned above said that poor market sentiments owing to the pandemic delayed the plan to launch its offering last year.
Devyani, which is US-based Yum! Brands Inc’s oldest franchise partner in India, is an associate company of Ravi K Jaipuria-led RJ Corp group, which is the largest bottler for PepsiCo in India.
The group has interests in beverages, healthcare, real estate and education. Listed firm Varun Beverages, a manufacturer, bottler and distributor of beverages, is part of RJ Corp group.
According to its website, Devyani operates around 500 plus outlets of Pizza Hut, KFC, Costa and other brands. It also has food courts, restaurants and bars vertical called Food Street which was started in 2009 at the New Delhi domestic airport.
Yum! Brands, the second-largest quick service restaurant (QSR) company in the world, picked up a minority stake in Devyani in February 2020. This followed Devyani’s acquisition of 74 KFC restaurants from Yum! Brands over a period of 18 months.
Devyani had posted consolidated net sales of Rs 1,565 crore during fiscal year 2019-20 as against Rs 1,356 crore a year before. Losses widened to Rs 121.4 crore from Rs 66.4 during the period under review, as per VCCEdge.
The quick service restaurant space in India is dominated by multinational chains McDonald’s, KFC, Burger King and Subway.
Fast-food chain Burger King India Ltd, controlled by private equity firm Everstone Capital, had received an astounding response to its initial public offering last December.
In March 2021, casual dining chain Barbeque Nation launched its IPO.