According to a source, Advent International, a private equity (PE) firm, has decided not to proceed with the acquisition of Everstone Capital’s 40.9% stake in Restaurant Brands Asia (RBA). RBA operates Burger King in India and Indonesia. The reason for Advent’s withdrawal is that certain terms proposed by Advent were not mutually agreed upon by the other parties involved in the deal.
“Advent is not keen on taking over the Indonesia business. It only wanted the India business. But Everstone and RBA want a package deal,” the source said.
Advent International declined to provide a comment on the matter, while Everstone did not respond to inquiries regarding the situation. Immediate access to RBA for clarification was not possible. It should be noted that Everstone holds its stake in RBA through its investment vehicle, QSR Asia.
According to the source, Advent had engaged Bain & Company to conduct research on the quick service restaurant (QSR) industry and its potential prospects as part of their deal evaluation. However, the talks did not progress beyond that stage.
During Q4FY23, RBA’s consolidated revenue from operations amounted to INR 513.95 crore, surpassing the previous year’s revenue of INR 399.79 crore for the same quarter. Although there was a marginal decline, losses were reported at INR 79.95 crore in the January-March quarter, compared to INR 81.53 crore in the corresponding period of the previous year.
In the fiercely competitive quick service restaurant (QSR) sector in India, Burger King competes with prominent players like McDonald’s, Domino’s, Subway, and KFC. ICICI Securities, in a research report released in May, highlighted increased competitive intensity in the North and East markets and potential delays in store expansion plans as significant downside risks for RBA.
As of the recently released annual report for FY2022-23, Burger King operates 391 stores in 92 cities across India, reflecting its active presence in the market.
During the quarter ended in March 2023, PE investments in India experienced a challenging phase as the macroeconomic downturns significantly impacted the pace of deal closures in the country. This situation coincided with Advent facing difficulties in finalizing their deal. According to data from Refinitiv, investments in India witnessed their sixth consecutive quarterly decline, plummeting by 75% year-on-year to reach USD 2.2 billion.
“Everstone will, however, not go for a distress sale as the business is a good asset. Even if they can’t immediately find a buyer, they will wait,” the source added.
The Everstone Group, headquartered in Singapore, oversees assets worth more than USD 7 billion and includes Everstone Capital as a significant component. On the other hand, Advent, since its inception, has made impressive investments totaling USD 70 billion across 42 countries.
On Monday, the closing share price of RBA on the BSE was INR 110.20 per share, reflecting a decline of 0.90 percent.