INDIA. UK food & beverage specialist SSP Group is creating a joint venture in India, under which it will own a 49% stake in Travel Food Services Private Limited (TFS), the fast-rising, much-respected Indian travel markets F&B operator. Completion is subject to a number of conditions, consents and approvals.
SSP will acquire shares from the Kapur Family Trust, SNVK Properties Private Limited and KAPCO Caterers, part of the K Hospitality Group and subscribe for new shares in TFS. K Hospitality operates a broad range of food & beverage outlets across India.
Travel Food Services’ story (see comment below*) has been one of the most impressive concessionaire developments in airport F&B or retail over recent years. The company was only unveiled in May 2009 after being founded by Indian entrepreneur Sunil Kapur. Since then it has grown both fast and qualitatively. Sunil Kapur’s sons Varun and Karan, both Executive Directors, have each played key roles in the company’s expansion.
TFS operates food & beverage outlets in travel locations, with approximately 170 units in India, including at six major airports in domestic and international terminals and in railway stations. It also runs a number of airport lounges, including (in joint venture with gategroup’s Performa) the acclaimed GVK Lounge at Chhatrapati Shivaji International Airport.
In addition to these contracts, it operates food & beverage outlets at Muscat Airport in Oman. Its brand portfolio includes a number of strong in-house concepts as well as leading third party brands such as KFC, Krispy Kreme, Pizza Hut and Coffee Bean and Tea Leaf.
The company has also proved a solid partner in India for Lagardère Travel Retail, helping the French retail giant to roll out Relay concept stores across the country.
SSP is acquiring 49% of TFS for an expected net consideration of £57.9 million (US$72 million). The acquisition will take place in two stages. The first stage is to acquire a 33% stake for an estimated net consideration of £39.0 million (US$48 million). This stage is expected to be fully completed by the end of February 2017. The second stage, to acquire a further 16%, is expected to take place by the end of 2018, for a net consideration of approximately £18.9 million (US$23.2 million), contingent upon the performance of the business.
The consideration will be satisfied out of SSP’s existing debt facilities. The transaction is expected to be earnings enhancing in the first full year of operation and to exceed SSP’s cost of capital by the third full year following the first stage of the acquisition.
TFS’ revenue was £41.7 million (US$51.2 million) and EBITDA was £8.3 million (US$10.2 million) for the year ended 31 March 2016.
In the year ending 31 March 2017, TFS will benefit from the first time inclusion of the recent buyout of certain joint venture partners, the full contribution of new units opened in 2016 and ongoing like for like sales growth.
Taken together, these items are expected to add approximately £3.0 million to EBITDA in the year ending 31 March 2017.
SSP CEO Kate Swann said: “This partnership is in line with the strategy we set out at our IPO. We have been looking for the right entry point into this exciting growth market and are delighted to have found an excellent partner in TFS. TFS brings a well-established business with a strong portfolio of brands. The combination of SSP’s international expertise in the travel sector and TFS’ strong local presence will provide an excellent platform for future growth in the Indian market.”
K Hospitality Group Chairman Sunil Kapur said: “We are delighted to be partnering with SSP. SSP’s international experience and proven track record, coupled with our knowledge and position in the region, means that we have a winning partnership to create a strong proposition for growth.”
*Comment: What an impressive story Travel Food Services has woven in the airport sector over recent years, writes Martin Moodie.
Back in May 2009 I was asked to speak at the company’s formal inauguration in Mumbai, where I first met Chairman Sunil Kapur, a man who struck me as quality-obsessed, financially astute, and growth-driven with a very clear vision of where he wanted to take the company.
I wrote subsequently of a “major new force in travel-related food & beverage operations”, having been impressed with Kapur’s pledge to open some 60,000sq ft of F&B space across Indian travel locations in the ensuing two years.
He and his sons Varun and Karan and the TFS team have gone way beyond that, carving themselves out an impressive stronghold as the dominant Indian airport F&B player, with a promising growth story in Indian railways also shaping nicely. The company has begun its international expansion via its Muscat Airport business in Oman and with this powerful joint venture in place, that growth looks set to accelerate.
It’s not just been about square metres and outlets either. The company has spearheaded the dramatic qualitative transformation of Indian airport food & beverage over recent years. And any international delegate at the recent Trinity Forum in Mumbai will testify to the excellence – in design, fit-out, food and service and Sense of Place – of The GVK Lounge at Chhatrapati Shivaji International Airport, surely one of the world’s best.
For both parties today’s announcement shapes like a very good deal. As Kate Swann notes, SSP coveted a strong position in India but needed the right entry vehicle. In a proven player with such strong local market and travel sector credentials it appears to have found just that. For TFS, SSP’s sheer scale will help drive the second phase of expansion, the main course if you will to the outstanding starter it has served to date.
Footnote: The Moodie Davitt Report also publishes The Foodie Report and Airport FAB e-Zine, the world’s only media focused on airport (and other travel-related) food & beverage. The company co-organises the annual Airport Food & Beverage (FAB) Conference & Awards. The Foodie Report/Airport FAB e-Newsletter is published every two weeks and The Airport FAB e-Zine every month.
Please send all news of food & beverage outlet openings, together with images, menus, video etc to Martin@MoodieDavittReport.com to ensure unrivalled global exposure.
