INDIA. SSP Group and joint-venture partner K Hospitality Corp today restated their high ambitions for the expansion of Travel Food Services (TFS) as the company’s shares began trading on the Indian Stock Exchanges (BSE and the National Stock Exchange of India). Click here for our Images of the Day feature which marked the launch.
TFS is the leading player in the airport food & beverage and lounge sectors in the Indian market, having grown from a single outlet at Mumbai International Airport in 2009 to almost 500 outlets across the market today. The company is present in 14 airports in India and three in Malaysia.
Speaking to The Moodie Davitt Report on a momentous day for the business, TFS Managing Director and CEO Varun Kapur said the listing represents “a once in a lifetime event for us and the wider TFS family”.
In a highly symbolic moment, TFS and SSP senior teams rang the bell to open trading at the National Stock Exchange today.
Kapur added, “There has been a wonderful celebratory atmosphere today, with great excitement among our teams. It has been an amazing journey to this point, begun by my father (Sunil Kapur) who has been such an inspiration to me and my brother Karan.
“And we could not have asked for a better partner on this journey than SSP, as well as having great relationships with our airport clients and with our brand partners.”
SSP acquired an initial stake in TFS in 2016, paying £57.9 million (US$73.9 million) for its 49% holding. It recently acquired a further 1.01% of TFS’s share capital in advance of the listing.
SSP Group CEO Patrick Coveney said, “It was a privilege to ring the market-opening bell today. We are in an industry that is defined by hospitality and TFS is brilliant at that. They deliver wonderful local execution alongside a set of capabilities that gives us a platform to do more together around the world.
“For today, in the immediate sense, we want to focus on two things. One is simply to celebrate this moment. To do what we have done today is a huge undertaking.
“The second thing this demonstrates is the awesome value that can be created if you do travel hospitality well.
“It shows what can be achieved if you get the right proposition in the right market, if you operate and execute well, build trust with your clients and brand partners, and deliver good economic returns.
“We hope it is a platform for TFS and SSP to progress, but for the wider sector to progress too. There has been some derating of the sector in some other regions, and this on the other hand is a shining light and helpful for us all. It is a powerful signal for the sector about the way in which you can create value by doing hospitality and travel.”
On investor interest, Coveney added: “We have listed a business here with absolutely fantastic value. It represents a balanced set of international and Indian, institutional and retail investors that have all come together to back this launch.
“That is quite an important part of the story. We are seeing quite a few overlapping investors with SSP, for example, and so it is worth seeing this as an international opportunity, as well as an Indian one.”
Elaborating, Kapur said: “We are privileged to have some leading Indian funds as well as global players who have looked into our business in India, how it has progressed in the last few years, and are excited about the opportunity ahead. They are all taking a long-term view, which is the way we look at the business too.
“The story of India has been and continues to be built on the tailwinds of passenger and infrastructure growth in the market. TFS delivers with its culture, and combined with SSP’s expertise it becomes a winning formula.
“Our top priority is our employee happiness, which leads to customer satisfaction, plus we have the right brand partners and can deliver the experience. Ultimately, that all comes together to deliver a strong financial result. That is hopefully what the partners and the shareholders who have come onboard see as our DNA. And we have been delivering too – in the last two years we have grown the business by around +20% on average.
“For the next stage, in addition just to the Indian story itself, which has a long runway ahead, we are taking our lounge expertise global with SSP. Here we see a big opportunity. In lounges globally, companies are pushing the envelope in terms of experience, which is what we do well.”
Coveney said, “If you just look at the sources of growth from here, the centrepiece is TFS’s extraordinary market position, leadership, relationships and the opportunity in this, the third-largest aviation market in the world.
“Then the second part, on which we are working hard, and which will be a real focus of what we do together over the coming years, is the format capability in the lounge channel that Varun speaks about. We rate that really highly.
“We will use the rest of SSP’s client relationships, market knowledge, food supply chain and operating processes in many other markets in the world. But where lounge opportunities come up, we will partner with TFS to access them in different ways in different markets.
“So everything in India will come through TFS. Then we will provide an access point for their lounge capability, with all of the local tailoring, client relationships and knowledge that SSP brings to the rest of the world, just as we have done in Malaysia and in Hong Kong already. The scope of the lounges partnership is global, and the sequence of markets we enter we will work out over time, though we see a strong initial focus on Asia.”
On whether TFS would diversify from its core in F&B and lounges as it grows, Kapur said: “There is so much to do in our existing channels. We understand what we do well. We have been doing it for years with the expertise of both partners.
“The runway in the core market, in India, is looking even better for the next ten years than it did for the past ten. And our ambition is even greater now than it ever was. So the opportunity lies in those segments we excel in, whereas other channels such as duty free are not part of our DNA.”
Based on the share price band set pre-IPO of between INR1,045 and INR1,100 per share (US$12.19 to US$12.83), TFS was valued at between INR137.6 billion and INR144.8 billion (US$1.61 billion to US$1.69 billion).
At time of publication the share price had dipped -2.29% from start of trading to INR1,074 (US$12.49). Both Kapur and Coveney stressed that a listing such as this is part of a long-term plan that outweighs short-term price fluctuations.
“We have been very open and transparent,” said Kapur. “We are building a business for the long term. And the names of some of the long-term investors and the fact that we had such strong demand pays testament to that. We want to drive confidence and we want to deliver value to these investors.”
Coveney added, “The global and local institutional investor base for this IPO was subscribed eight times over capacity. We hope that this very strong, latent demand will feed into the stock over time as we build out the story going forward.
“It’s difficult to call what happens on day one or two, and of course every CEO wants the stock to rise and keep rising, but the substance and the demand for this company is very reassuring.” 
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