Barbeque Nation IPO must be priced the same way as its menu—value for money

• Barbeque Nation Hospitality has received market regulator SEBI’s approval to raise about ₹1,000-1,200 crore through an initial public offering.
• The company is backed by private equity investor CX Partners and ace investor Rakesh Jhunjhunwala’s investment firm Alchemy Capital.
• The promoters hold 60.24%, CX Partners owns 33.79% and renowned stock market investor Rakesh Jhunjhunwala’s investment firm Alchemy Capital holds 2.05% in the company.

One of India’s most popular barbeque joints is ready to sell shares in the market. And just like the patrons of the chain, who dig the$4, the investors too will demand ‘value for money’.

The market regulator, the Securities and Exchange Board of India (SEBI), has approved the company’s plan to raise ₹1,000-1,200 crore through an initial public offering. The IPO is coming at a time when the COVID-19 pandemic has made many restaurants unviable. “Food ordering can meaningfully increase and share of trusted brands is bound to go up vs random mom-pop restaurants that may not be able to assure hygiene. However, out-of-home eating and loss of ordering at office/social interactions may not be made up by such shifts for the shorter term,” according to an Ambit Capital report in June.

Particulars	Amount
Total IPO size	₹1,000-1,200crore
Fresh issue	₹275 crore
Pre-IPO fund raising	₹150 crore

The company will use the IPO proceeds to repay an outstanding loan of ₹205 crore, in part or full, and for general corporate purposes.

Bidders	IPO allocation
Qualified institutional buyers (QIBs)	50%
Non-institutional bidders	15%
Retail individual bidders	35%

Here’s all you need to know before investing in this IPO

Investors and Promoters

The company is backed by private equity investor CX Partners and ace investor Rakesh Jhunjhunwala’s investment firm Alchemy Capital. Alchemy Capital bought about 3.5% stake in Barbeque-Nation Hospitality for ₹90 crore last year.

It is also promoted by $3 billion Sayaji Hotels, Sayaji Housekeeping Services, Kayum Dhanani, Raoof Dhanani and Suchitra Dhanani.


It filed for an IPO in 2017 with Sebi seeking to raise ₹700 crore. However, the regulator kept the processing of the company’s proposed IPO in abeyance $4” and finally approved the IPO plan in January 2018.


The long chain of restaurants

The company owns and operates Barbeque Nation Restaurants at 138 outlets across India and seven outlets in the UAE, Oman and Malaysia.

Although, the company could not launch the initial share-sale due to adverse market conditions.

The restaurant chain has seen compounded annual growth of 14.29% in its dining covers in India, according to $4. It has grown from ₹68.60 crore in FY17 to 89.60 crore in FY19, $4.


Recent acquisitions

It also acquired 61.35% stake in Red Apple Kitchen, which owns Toscano, a casual dining Italian restaurant chain that has ten outlets operating across Bengaluru and Chennai.

Barbeque Nation also launched UBQ through its existing kitchen infrastructure, in November 2018 to provide a la carte Indian cuisine in the value segment, which is also being availed by delivery across 71 cities in India.

The chain is 14-years old and has been fairly popular throughout its existence. However, the overall gloom in the restaurant industry may cap the potential value that could be unlocked through this IPO. "The restaurant & hospitality sector, despite being amongst the worst hit due to COVID 19 has tremendous potential in a growing economy like India. With the rise of nuclear families, changing habits, increasing urban population with higher disposable income coupled with strong growth of food related e-commerce platforms,a strong branded player like Barbeque Nation stands to gain in the future. If the IPO is priced well, it could attract a lot of interest among both retail & institutional investors leading to a strong listing at the bourses," said Abhijeet Ramachandran, Independent Analyst/ Co-Founder and trainer at Tips2trade

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