Sapphire Foods India has kicked off the bookbuild for its IPO, a pure offer of secondary shares, having secured anchor orders from a host of sovereign wealth and international funds.
The company operates KFC, Pizza Hut and Taco Bell franchises in South Asia. It is one of the largest franchisees of US fast food company Yum Brands on the Indian subcontinent.
Sapphire’s offer opened on Tuesday and will run through Thursday. It is targeting up to Rp20.7bn ($278.9m) from its listing, which comprises an offer-for-sale (OFS) of 17.57m secondary shares.
The shares are available within a price range of Rp1,120.00 to Rp1,180.00.
Goldman Sachs is cashing in on its investment in the company, selling 4.85m shares from its stake, held by investment vehicle WWD Ruby. New Delhi-based private equity firm CX Partners is selling 3.96m, while India’s AAJV Investment Trust is offering 80,169 shares and Edelweiss 2.26m from a pair of funds. Promoters Sapphire Foods Mauritius and QSR Management Trust are providing 5.57m and 850,000 shares, respectively.
Sovereign support
About 7.91m shares were snapped up by anchor investors on Monday. Bought at the top of the price range, a pair of Singaporean sovereign investors subscribed for a combined 13.08% of the anchor tranche, while the Abu Dhabi Investment Authority took 7.5% and Ontario Teachers’ Pension Plan Board 3.85%.
Other anchor accounts include an array of Fidelity funds and local Sundaram mutual funds, as well as foreign and domestic banks and life insurers.
The 9.66m shares available for bookbuilding are split 5.2m for institutional buyers, 2.6m for non-institutional accounts and 1.7m for retail investors. The book was 75% covered as of early afternoon Wednesday in Mumbai, with few bids from institutional and non-institutional investors. Retail accounts had covered their portion 3.93 times.
JM Financial is the left lead bank for Sapphire’s listing. It is working with bookrunning lead managers Bank of America, ICICI Securities and IIFL Securities.
Sapphire also counts Indian private equity firm Samara Capital among its pre-IPO shareholders.
The company has a non-exclusive agreement with Yum allowing it to operate KFC, Pizza Hut and Taco Bell restaurants in various Indian states, as well as Sri Lanka and the Maldives, according to its IPO prospectus. It owned and operated 209 KFC franchises, 239 Pizza Huts and two Taco Bells, both in Sri Lanka.
Sapphire plans to open new restaurants to capitalise on growth in the Indian food services market. According to research cited in the prospectus, the market is expected to hit Rp6.2tr by 2025, ballooning from Rp4.2tr last year.
Sapphire’s revenue slumped in the 2021 financial year to Rp10.2bn from Rp13.4bn the year before, following the outbreak of Covid-19 and the series of strict lockdowns that followed. But its income rebounded in the three months to June 30 this year. It booked revenue of Rp3.03bn, up from Rp1.11bn in the same period of 2020.
Paytm on the road
Sapphire's deal comes close on the heels of Paytm, which is in the IPO market this week with a Rp183bn deal, India’s largest private sector listing in over 13 years.
The digital payments giant issued Rp83bn in primary shares for the deal, while the firm’s line up of global backers are providing the balance in secondary shares. Among them are Alibaba, Ant Group, Softbank Vision Fund and Berkshire Hathaway.
The company is listing as One97 Communications. Its offer was set to close at the local market close on Wednesday. As of early afternoon, the book was 1.15 times subscribed.
Investors have access to 48.4m shares at Rp2,080.00 to Rp2,150.00 apiece.
The syndicate also placed a further 38.3m shares with anchors. The Rp83.25bn tranche comprises 122 accounts, including an array of global and local long-only investors, banks and financial institutions, and mutual funds.
Paytm, launched in 2009, is a platform with a QR code system that enables merchants to receive payments directly via a code scanned by customers.
The listing will be the largest by a private company in India since Reliance Power listed in 2008 for Rp115.6bn, according to Dealogic data. The deal was valued around $2.6bn at the time.