Barbeque Nation Grills A Pre-IPO

Barbeque Nation Hospitality Limited has raised INR 80-90 crore in a pre-IPO stage funding from Alchemy Capital Management. The restaurant chain headquartered at Bengaluru is all set to raise INR 700 crore through its IPO (initial public offering). The firm had proposed its draft IPO papers to the Securities and Exchange Board of India (SEBI) in August 2017, which the regulation body approved in January 2018. As per the IPO draft, the company is set to issue fresh shares worth INR 200 crore and puts up an offer for sale of 6,179,000 equity shares.

Alchemy Capital Management, an investment firm co-founded by star stock market investor Rakesh Jhunjhunwala has acquired a minority stake in consideration for the INR 80-90 crore funds invested. The hospitality chain was valued at INR 2300-2400 crore at the pre-IPO stage. According to Tofler’s sources, the funds raised by the company are to be used to build new restaurants expanding the chain’s presence across India. As of June 2017, the casual dining restaurant chain operates 81 restaurants in India spread across 42 cities and one overseas in Dubai.

Some part of the funds will also be used for repayment of debts, as the company’s net debt for the fiscal stood at INR 63.95 crore. Its total liabilities stand at INR 1374.09 crore, with current liabilities amounting to INR 807.39 crore and non-current liabilities amounting to INR 566.70 as of March 2017. Barbeque Nation’s company financial statements for the year 16-17 reported revenue of INR 489.4 crore, a rise of 18.3% from the revenue of INR 399.8 reported in the previous financial year. The profit for the fiscal was reported at INR 15.8 crore against the profit earned of INR 12.5 crore during the previous fiscal.

The PAT (Profit After Tax) margin and EBITDA (Earning Before Interest, Tax, Depreciation, Amortization) margin for 2017 are 2.03% and 13.29% respectively. These figures reflect a decline from the PAT and EBITDA margins for 2015 which stood at 4.44% and 15.62% respectively. Net  Debt to Equity ratio for the fiscal 2017 stands at 0.44, a significant increase from the 2015 fiscal value of 0.13. Return on average capital employed for 2017 was 18.19%, a spike from the previous fiscal’s 15.88%, which was a sharp decline from 2015 at 23.14%.

Barbeque Nation is backed by companies like Sayaji Hotels and Housekeeping Services Limited and the Dhanani family. In the year 2013, private equity firm CX Partners came on board after investing in the restaurant chain. The New Delhi based equity firm was founded in 2008 by Ajay Relan.

The year 2017 saw several Indian companies raise funds in the pre-IPO stage, the combined funds raised of such IPO bound companies amounting to a total sum of $600 million. Prominent investment firms and public market investors such as Motilal Oswal, White Oak Capital, New Horizon Investments and Madhusudanan Lela participated in such pre-IPO funding rounds. Apart from asset management firms and public investors, pre-IPO fund raising also saw participation from hedge fund investors, family offices and high net worth individuals.