LEI:213800QGNIWTXFMENJ24
10 December 2024
Planned Initial Public
OfferING IN INDIA of Travel Food Services Limited
SSP Group plc ("SSP" or "the Group"), a leading
operator of restaurants, bars, cafes and other food and beverage
outlets in travel locations across 37 countries, in conjunction
with K Hospitality Corp, SSP's joint venture partner in India, is
pleased to announce the planned initial public offering ("IPO" or
"the Transaction") of Travel Food Services Limited ("TFS"), in its
home market of India. TFS is the leading player1 in the
fast-growing airport quick service restaurant and lounge sectors in
India.
A Draft Red Herring Prospectus (the first
public document in the Indian listing process, "DRHP") of TFS in
connection with the proposed IPO has been filed today with the BSE
Ltd and will shortly be filed with the National Stock
Exchange of India Limited. The DRHP will be published on the
Indian Stock Exchanges (www.bseindia.com and
www.nseindia.com),
the Securities and Exchange Board of India ("SEBI") website
(www.sebi.gov.in)
and TFS' website, which will be available at www.travelfoodservices.com/investors.
Following
publication of the DRHP, in SSP's role as a Promoter of the
Transaction, SSP is under certain restrictions imposed by SEBI's
Issue of Capital and Disclosure Requirements with respect to
dissemination of information regarding TFS. Please refer to the
DRHP for further details on TFS and the
transaction.
TFS has
commissioned a report by CRISIL2 (part of S&P Global
Inc.) (the "CRISIL Report") exclusively in connection with the
Offer for the purposes of confirming TFS' understanding of the
market in which it operates. The industry and market data cited in
this announcement are sourced from the CRISIL Report. Further
details and risks in relation to the CRISIL Report can be found in
the DRHP.
Headlines
·
SSP, and our joint venture partner in India, K Hospitality
Corp, will both act as Promoters of the planned IPO of TFS. Subject
to regulatory approval, the pricing and completion of the IPO is
targeted to be in Spring 2025
· SSP
and K Hospitality Corp have built a very strong partnership since
the creation of the TFS joint venture and both partners remain
fully committed to the long-term success of TFS
·
India is a strategically important market for SSP and we will
continue to build on TFS' market-leading position to capitalise on
the opportunities in the fast-growing Indian travel
market
· SSP
acquired an initial stake in TFS in 2016 and currently holds 49% of
TFS (which it consolidates) for which it paid net consideration of
£57.9m3
·
Prior to the Transaction, SSP expects to purchase additional
shares in TFS (representing 1.01% of TFS' issued share capital) at
a value referenced to the IPO price; following completion of the
purchase, SSP expects to indirectly hold 50.01% of TFS' issued
share capital and TFS will continue to be consolidated in SSP's
reported financial results. The Kapur Family Trust, which is the
shareholding entity of K Hospitality Corp, will be the selling
shareholder in the planned IPO
Commenting on
the planned IPO, Patrick Coveney, CEO of SSP Group,
said
"India is an attractive and strategically important market for
SSP, aligned to our prioritisation of high growth geographies with
the greatest long-term returns opportunities. Since 2016, through
our joint venture partnership with K Hospitality Corp for Travel
Food Services ("TFS") we have built a successful Indian platform.
An IPO will set up our investment in India for the next stage of
growth. An IPO will support TFS as it continues to deliver its
growth strategy whilst creating a structure to showcase the value
of the business. The planned IPO would ensure that SSP controls and
consolidates TFS, in line with our strategy for the market. We
believe that the market potential in India combined with TFS'
economic model and market leadership provides a compelling
opportunity to deliver growth and returns for the
Group."
Commenting on the partnership with SSP Group, Varun Kapur,
Managing Director and CEO of TFS, said
"Since 2016, we have benefited from SSP's global Travel QSR
expertise and best practices, alongside long-standing relationships
with an extensive range of international brands and bespoke
concepts. We look forward to growing our close partnership with SSP
as we embark on this significant milestone for our joint
venture."
SSP
will host a conference call at 08.00 (UKT) on 11 December
2024 to discuss the Planned IPO of TFS, details of how to join can
be accessed at:
https://webcasts.foodtravelexperts.com/ssp/announcement24
This announcement contains inside information
for the purposes of Article 7 of EU Regulation 596/2014 (which
forms part of domestic UK law pursuant to the European Union
(Withdrawal) Act 2018) and is being released on behalf of SSP by
Fiona Scattergood, Group General Counsel and Company
Secretary.
SSP is being advised by Latham & Watkins.
TFS is being advised by Latham & Watkins and Shardul Amarchand
Mangaldas & Co.
CONTACTS
Investor and analyst
enquiries
Sarah John, Corporate Affairs Director, SSP
Group plc
Sarah Roff, Group Head of Investor Relations,
SSP Group plc
+44 (0) 7736 089218 / +44 (0) 7980
636214
E-mail: sarah.john@ssp-intl.com
/ sarah.roff@ssp-intl.com
Media enquiries
Rob Greening / Russ Lynch
Sodali & Co
+44 (0) 207 250 1446
E-mail: ssp@sodali.com
NOTES TO
EDITORS
About
SSP
SSP Group plc (LSE:SSPG) is a global leading
operator of food and beverage outlets in travel locations employing
around 49,000 colleagues in over 3,000 units across 37 countries.
We specialise in designing, creating and operating a diverse range
of food and drink outlets in airports, train stations and other
travel hubs across six formats: sit-down and quick service
restaurants, bars, cafés, lounges, and food-led convenience stores.
Our extensive portfolio of brands features a mix of international,
national, and local brands, tailored to meet the diverse needs of
our clients and customers.
Our purpose is to be the best part of the
journey, and we are committed to delivering leading brands and
innovative concepts to our clients and customers around the world,
focusing on exceptional taste, value, quality and service.
Sustainability is crucial for our long-term success, and we aim to
deliver positive impact for our business while uniting stakeholders
to promote a sustainable food travel sector.
www.foodtravelexperts.com
About
TFS
TFS is a joint venture between SSP and K
Hospitality Corp (the flagship hospitality brand under which the
Kapur Family Trust operates, owns or invests in various hospitality
and food services companies).
TFS is the leading player in the fast-growing
airport travel quick service restaurant ("Travel QSR") and lounge
("Lounge") sectors in airports in India based on its revenue in
Fiscal 20241.
www.travelfoodservices.com
History of TFS
and SSP Group
The Indian travel market has been highly
attractive and of strategic importance to SSP for many years,
principally due to its structural growth, driven by economic
development, long-term demographics and the under-penetration
of air travel. These characteristics clearly align with SSP's
strategic prioritisation towards accelerating its development in
high-growth markets.
In 2016, SSP announced an intention to create a
JV partnership with K Hospitality Corp as an entry point into the
Indian market. The purpose of the JV was to combine SSP's
international scale in the travel sector with TFS' local market
knowledge and food and beverage expertise, creating a platform for
growth in the Indian market. The transaction was executed through
the purchase of a 49% share of TFS for a consideration of £57.9m,
completed in three stages, with the acquisition of an initial 15.1%
share in December 2016 and further 17.9% in March 2017, followed by
a third tranche of 16.0% in April 2019.
The partnership with TFS has enabled SSP to
build on its exposure to the strategically important market of
India and the wider Asia Pacific region. The strength of TFS'
Lounge platform and capabilities have positioned TFS and SSP well
to benefit from expansion in this sector of the airport catering
market.
India was historically (from 2009-2019) the
fastest-growing passenger market among key aviation markets such as
the US, China and Japan and this is expected to continue in the
medium and long-term, according to the CRISIL Report. This has
delivered sustained growth and returns to SSP since the creation of
the JV. As previously disclosed, when SSP entered into the JV
partnership, for the year ended 31 March 2016, TFS' revenue was
£41.7m and EBITDA was £8.3m4. For the year ended 31
March 2024, under Indian accounting standards, TFS' revenue from
operations was £134.2m with EBITDA of £52.9m and profit after tax
of £28.7m5.
Transaction overview
SSP's joint venture in India, TFS, has today
filed its Draft Red Herring Prospectus ("DRHP") in connection with
the planned listing of its equity shares and IPO through an offer
for sale by the Kapur Family Trust ("Offer"). The Equity Shares of TFS are proposed to be listed on the
Stock Exchanges being BSE Limited ("BSE") and National Stock
Exchange of India Limited ("NSE", and together with BSE, the "Stock
Exchanges"). Subject to a go-ahead from SEBI, Indian
Capital Markets regulator, and registration
of the DRHP with the registrar of companies, the Bid / Offer period
is targeted to open in 4-5 months from now, depending on market and
other conditions.
The Offer is an offer for sale of
equity shares by the Promoter Selling Shareholder, the Kapur Family
Trust. TFS and SSP will not receive any proceeds from the
Offer.
SSP currently holds 49.00% of TFS'
issued share capital and has agreed to purchase an additional 1.01%
of TFS' shares prior to the IPO. Upon completion, SSP will hold
50.01% of TFS' issued share capital. As such, SSP would become the
majority shareholder of TFS.
Overview of
TFS
TFS is the leading player1 in the
fast-growing travel quick service restaurant ("Travel QSR") and
lounge ("Lounge") sectors in airports in India based on revenue in
Fiscal 2024, according to the CRISIL Report. TFS' Travel QSR
business comprises a range of curated food and beverage ("F&B")
concepts across cuisines, brands and formats, which have been
adapted to cater to customers' demands for speed and convenience
within travel environments.
TFS leverages its extensive F&B brand
portfolio, comprising 117 partner and in-house brands, in the
operation of 397 Travel QSR outlets across India and Malaysia, as
of June 30, 2024. TFS' Travel QSR outlets are predominantly
situated within airports, with select outlets in highway
sites.
TFS' Lounge business comprises designated areas
within airport terminals, accessible primarily by first and
business class passengers, members of airline loyalty programmes,
select credit card and debit card holders and members of other
loyalty programmes. TFS had 31 Lounges across India and Malaysia,
as of June 30, 2024, in addition to a new Lounge opened in Hong
Kong in July 2024.
TFS is present in 14 airports in India and
three airports in Malaysia, as of June 30, 2024. Of the 14 airports
in India in which TFS operates, 13 of them were amongst the 15
largest airports in the country by passenger traffic in Fiscal
2024, based on air passenger traffic. The 14 airports in which TFS
operates served 74% of the total domestic and international air
traffic footfall in India in Fiscal 2024, according to the CRISIL
Report. Such airports include the Delhi airport, Mumbai airport,
Bengaluru airport, Hyderabad airport, Kolkata airport, and Chennai
airport.
TFS operated the largest network of Travel QSR
outlets in Indian airports as of March 31, 2024, with a market
share of 24% based on revenue in the Travel QSR sector in Indian
airports in Fiscal 2024, according to the CRISIL Report. TFS also
operated the largest network of private Lounges in Indian airports
as of March 31, 2024, according to the CRISIL Report, comprising 24
Lounges across eight airports in India. TFS had a market share of
45% based on revenue (including associates and a joint venture) in
the airport Lounge sector in India in Fiscal 2024, according to the
CRISIL Report.
TFS' operational capability, presence across
major airports in India and TFS' extensive F&B brand portfolio
position it well to benefit from the continuing growth in air
travel and travel related expenditure in India.
The growth
outlook and market opportunity for TFS
TFS operates in the growing travel segments in
India. According to the CRISIL Report a number of factors support
continued growth of the sectors in which TFS operates:
·
Macro and demographic tailwinds
·
Growth of the aviation sector, supported by both
an increasing propensity to travel
·
Increased airport dwell times, prevalence of
low-cost carriers and growth of credit card and loyalty
programmes
·
Under-penetration of lounges in Indian airports
and headroom for growth of airport lounges globally
·
Significant expected government and private
infrastructure investment
An
IPO will enhance TFS's platform to deliver future growth and
returns
As TFS positions itself to further capitalise
on the market opportunity and deliver sustainable long-term growth
and returns, SSP believes that the planned IPO will deliver a
number of benefits:
·
Increased market prominence of TFS: As a listed company with strong and transparent corporate
governance, TFS' will have enhanced market presence, visibility and
brand awareness across the public domain. TFS will seek to leverage
this with its clients and local infrastructure partners as well as
with global partner brands
·
Provide greater credibility in the Indian
market: TFS will benefit from an
enhanced risk management framework and governance, with a local
board and executive team, enabling the business to attract and
retain local talent and allowing TFS to enhance its local
partnerships
·
Open
up future growth opportunities and provide access to capital in due
course: The IPO will provide TFS
with access to the equity markets. TFS has a significant market
opportunity, particularly across international lounges. A listed
TFS would have greater access to raising additional capital from
investors focused on extending their exposure to travel markets
experiencing growth.
Furthermore, SSP believes that the planned IPO
will benefit its shareholders by placing its investment in the
strategically attractive Indian market onto an even stronger
platform and by highlighting the value that has been created since
its original acquisition of a stake in TFS. This IPO will also
create a basis to build further value for shareholders, given TFS's
strong market position and its future growth potential as well as
enhancing TFS' reputation, leadership, governance and competitive
position within the Indian market.
The planned IPO puts the business on
an even stronger footing for the future and will serve to further
reinforce the long-standing partnership between SSP and K
Hospitality, as both partners will continue to play an extremely
important role in the success of the business.
Financial considerations for SSP
For accounting purposes, SSP will continue to
consolidate TFS and its group companies (including its controlled
joint ventures).
Ongoing relationship between TFS and SSP
Immediately upon completion of the
IPO, SSP and TFS will both operate as independent and separately
listed companies. Each company has its own board of directors and
will continue to do so. SSP has nominated two nominee directors to
the board of directors of TFS. SSP intends that Jonathan Davies
(SSP Group Deputy CEO and CFO) and Jonathan Robinson (SSP CEO Asia
Pacific) will join the board of TFS in due course as its nominee
directors, subject to all necessary regulatory clearances.
While SSP will maintain a strategic relationship with TFS,
TFS has run as an independent company with an independent executive
management team and will continue to do so.
Both companies continue to work in
close collaboration. For example, in the Travel QSR Business, TFS
has partnered with major global brands, with the support of SSP, to
launch into India at select airport locations.
In relation to TFS' Lounge business,
in December 2024, TFS and SSP entered into a letter of intent,
pursuant to which TFS will take a lead role in developing an
international lounge strategy for SSP. TFS will directly operate
lounges across the Indian subcontinent, South East Asia (excluding
Hong Kong, and Singapore) and the Middle East (excluding Egypt),
while SSP will have the right to directly operate Lounges in
Europe, North America and Australasia. SSP will have the option to
leverage TFS' expertise in the Lounge sector, marketing collateral
and ARAYA branding under a detailed franchise agreement, for
which SSP will pay TFS a royalty
fee.
Notes
1. Based on revenue in Fiscal
2024, according to the CRISIL Report
2. Report titled "Assessment
of Indian travel QSR and Global lounges industry", dated 10
December 2024 prepared and issued by CRISIL, commissioned by and
paid for by TFS, pursuant to an engagement letter with CRISIL dated
October 2024, exclusively for the purposes of the Offer
3. As disclosed
by SSP on 20 October 2016
4. The revenue
of £41.7m and EBITDA of £8.3m in FY 2016 accounted for under Indian
GAAP represent the proportionate consolidation of the TFS Group
including its share of revenue and profit from its joint ventures,
as disclosed by SSP on 20 October 2016, and based on an exchange
rate of Indian Rupees to Sterling of 81.9
5. The revenue from
operations of £134.2m, EBITDA of £52.9m and Profit after tax of
£28.7m in FY 2024 accounted for under Indian Accounting Standards
(IND AS) are based on an exchange rate of Indian Rupees to Sterling
of 104.0
TRAVEL FOOD SERVICES
LIMITED ("TFS"), our joint venture in India, is proposing,
subject to applicable statutory and regulatory requirements,
receipt of requisite approvals, market conditions and other
considerations, to make an initial public offering of its Equity
Shares ("Offer") and has filed a Draft Red Herring Prospectus dated
10 December 2024 ("DRHP") with the BSE Limited ("BSE"). It will
shortly be filed with the National Stock Exchange of India Limited
("NSE" together with BSE, collectively, "Stock Exchanges") and with
the Securities and Exchange Board of India ("SEBI"). The DRHP will
shortly be available on the website of SEBI at www.sebi.gov.in, as well
as on the websites of the Stock Exchanges i.e. BSE and NSE at
www.bseindia.com and
www.nseindia.com,
respectively, on the website of the Company at www.travelfoodservices.com
and on the website of the Book Running Lead Managers ("BRLMs")
i.e., Kotak Mahindra
Capital Company Limited, HSBC Securities and Capital Markets
(India) Private Limited, ICICI Securities Limited and Batlivala
& Karani Securities India Private Limited, at,
https://investmentbank.kotak.com,
https://www.business.hsbc.co.in/en-gb/regulations/hsbc-securities-and-capital-market,
www.icicisecurities.com,
and https://www.bksec.com/,
respectively. Any potential investors should note that investment
in equity shares involves a high degree of risk and for details
relating to such risk, see ''Risk
Factors'' on page 34 of the DRHP. Potential investors should
not rely on the DRHP filed with SEBI and the Stock Exchanges and
should instead rely on their own examination of TFS and the Offer,
including the risks involved, for making any investment decision.
This announcement does not constitute an invitation or offer of
securities for sale in any jurisdiction.
The Equity Shares of TFS have not been and will not
be registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act") or any other applicable law of
the United States and may not be offered or sold within the United
States except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the U.S.
Securities Act and applicable United States state securities laws.
Accordingly, the Equity Shares are being offered and sold (i)
within the United States only to persons reasonably believed to be
"qualified institutional buyers" (as defined in Rule 144A under the
U.S. Securities Act in transactions exempt from or not subject to
the registration requirements thereunder, and (iii) outside the
United States to eligible investors in "offshore transactions" as
defined in, and in reliance on, Regulation S under the U.S.
Securities Act and the applicable laws of the jurisdiction where
those offers and sales occur. No public offering of
the Equity Shares or other securities is being made in
the United States.
ENDS