SSP shares soar as Caffe Ritazza owner preps £1.2bn IPO for Indian JV
The Upper Crust and Caffe Ritazza owner said the initial public offering of Travel Food Services (TFS) has a price band of 1,045 to 1,100 Indian Rupees per share.
This implies a market valuation of between 137.6 billion and 144.8 billion Indian Rupees, or about £1.17billion to £1.23billion at current exchange rates.
SSP initially hoped the listing would occur during the spring, following the filing of a draft red herring prospectus with the Indian regulatory authorities in December.
It intends to purchase 1 per cent of TFS's issued share capital for around £12.5million, which will take its overall stake in the business to above 50 per cent.
Shares in the London-listed firm soared 8.5 per cent to 188.5p by mid-Wednesday afternoon, making them the FTSE 250 Index's biggest riser.
Headquartered in Mumbai, TFS operates dozens of lounges and hundreds of quick-service restaurants across 14 airports in India and three in Malaysia.
In addition to in-house brands like Idli.com and Dilli Streat, the group runs franchise outlets of famous global food-to-go companies, including KFC, Domino's Pizza, and Jamie Oliver's Pizzeria.
It is co-owned by SSP and K Hospitality, an Indian food service business with over 500 locations, whose shareholding entity is the Kapur Family Trust.
Trading in TFS shares is set to begin on the Indian stock exchanges on 14 July.
Once the IPO is completed, SSP's deputy chief executive, Jonathan Davies, and Asia-Pacific boss, Jonathan Robinson, will join TFS's board.
SSP's announcement comes as the company embarks on a cost-cutting programme to improve margins and returns amidst more challenging economic conditions.
'Recent geopolitical events have led to a heightened level of uncertainty across some of our travel markets, in particular in North America,' the firm told investors in May on the release of its half-year results.
For the six months ending March, the group's turnover increased by 9 per cent to £1.6billion, supported by the acquisition of the Midfield Concessions business in Denver.
In the UK and Ireland, SSP's revenue rose by 15.4 per cent to £892.5million thanks to continued growth in rail commuter numbers and strong demand in the air channel.
Its operating profits also climbed by 20 per cent to £45million, although on a statutory basis, they slumped by around three-quarters to £15million due to costs from an IT transformation project and the recognition of impairment charges.
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