REG - SSP Group PLC - Planned IPO in India of Travel Food Services

SSPAnnouncement

10/12/2024 17:45

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RNS Number : 5749P  SSP Group PLC  10 December 2024

  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 player(1) 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 (http://www.bseindia.com/) and www.nseindia.com
(http://www.nseindia.com/) ),  the Securities and Exchange Board of India
("SEBI") website (www.sebi.gov.in (http://www.sebi.gov.in/) ) and TFS'
website, which will be available at www.travelfoodservices.com/investors
(http://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 CRISIL(2) (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
£57.9m(3)

·    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
(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 (mailto: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 (http://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 2024(1).

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 £8.3m(4). 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 £28.7m(5).

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 player(1) 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
(http://www.sebi.gov.in) , as well as on the websites of the Stock Exchanges
i.e. BSE and NSE at www.bseindia.com (http://www.bseindia.com) and
www.nseindia.com (http://www.nseindia.com) , respectively, on the website of
the Company at www.travelfoodservices.com (http://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://investmentbank.kotak.com) ,
https://www.business.hsbc.co.in/en-gb/regulations/hsbc-securities-and-capital-market
(https://www.business.hsbc.co.in/en-gb/regulations/hsbc-securities-and-capital-market)
, www.icicisecurities.com (http://www.icicisecurities.com) , and
https://www.bksec.com/ (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

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