Sapphire Foods India Limited IPO: Opens tomorrow; key details that investors must know before investing

Sapphire Foods India Limited, a franchise operator of KFC and Pizza Hut restaurants, will open its initial public offering (IPO) for subscription tomorrow, i.e., on Tuesday, November 9, 2021. Sapphire Foods has fixed the price band of the issue at Rs 1,120-1,180 per share. It seeks to raise up to Rs 2,073 crore through the issue that will close on Thursday, November 11, 2021.

The IPO will be entirely an offer for sale (OFS) of 1,75,69,941 equity shares by promoters and existing shareholders. Also, the company is not going to receive any proceeds from the offer.

As a part of the OFS, QSR Management Trust will sell 8.50 lakh shares, Sapphire Foods Mauritius Ltd will offload 55.69 lakh shares, WWD Ruby Ltd will divest 48.46 lakh shares and Amethyst will offer 39.62 lakh shares. In addition, AAJV Investment Trust will sell 80,169 shares, Edelweiss Crossover Opportunities Fund will offload 16.15 lakh shares and Edelweiss Crossover Opportunities Fund-Series II will divest 6.46 lakh shares.

Investors can bid for a minimum of 12 equity shares and in multiples of 12 shares thereafter. The maximum subscription amount for a retail investor is Rs 2 lakhs. Retail investors can invest a minimum of Rs 14,160 and their maximum investment would be Rs 1,98,240 for 14 lots as they are allowed to invest up to Rs 2 lakh in the IPO.

The company said up to 75 per cent of the shares are reserved for qualified institutional buyers, 15 per cent for non-institutional buyers and the remaining 10 per cent for retail investors. The company's shares will be listed on the BSE and the National Stock Exchange.

JM Financial Limited, BofA Securities India Limited, ICICI Securities Limited and IIFL Securities Limited are the book running lead managers of the issue, while HDFC Bank Limited is the sponsor bank for the purpose. Link Intime India Private Limited is the registrar for the issue.

Issue Timeline

• Bidding Period for the IPO: November 9-11, 2021.
• Allotment: November 16, 2021.
• Initiation of Refunds: November 17, 2021.
• Credit of Shares to Demat Account: November 18, 2021.
• IPO Listing: November 22, 2021.

Sapphire Foods is one of YUM's franchisee operators in the Indian subcontinent with revenue from operations of Rs 13,404.12 million and Rs 10,196.19 million for the financial years 2020 and 2021, respectively. It is also Sri Lanka's largest international QSR chain, in terms of revenue for the financial year 2021 (with revenue of Rs 1.90 billion representing 35 per cent of the total market revenue), and a number of restaurants operated as of March 31, 2021 (with 68 restaurants representing 39 per cent of the total number of outlets in the market) (Source: Technopak Report). The company has also established a presence in the Maldives.

Within the organized food services market in India, the QSR chain sub-segment is the fastest-growing sub-segment with its value expected to grow at a CAGR of approximately 23 per cent from Rs 188.00 billion in the financial year 2020 to Rs 534.00 billion in the financial year 2025. Chicken and pizza are amongst the largest categories within the QSR chain sub-segment.

As of March 31, 2021, KFC and Pizza Hut restaurants comprised approximately 7 per cent and 6 per cent, respectively, of the total number of outlets of key QSR brands in India (Source: Technopak Report). It is backed by marquee investors including Samara Capital, Goldman Sachs, CX Partners and Edelweiss.