Travel Food Services IPO fully subscribed as institutions drive demand

Indian airport restaurant and lounge operator Travel Food Services' $234 million IPO was hauled over the finish line on Wednesday by institutional investors as risk-averse retail investors shied away amid US trade deal concerns.

The IPO, India's ninth-largest this year, came in a month when firms are expected to raise $2.4 billion through initial share sales.

It was subscribed 1.89 times, driven by institutional bids that were 5.23 times the shares reserved for them. Meanwhile, retail bids stood at a 0.44 times as of 2:12 p.m. IST.

"The overhang of a trade deal with the US is one of the factors likely keeping risk averse non-institutional and retail investors away from the TFS IPO," said Sunny Agarwal, head of fundamental equity research at SBICAPS Securities.

India, the world's third-largest aviation market, is witnessing a sharp uptick in travel demand and as disposable incomes rise, passengers are spending more on food, beverages, and premium services such as lounges.

Ratings agency CRISIL projects India's airport quick service restaurant sector to grow 17 per cent-19 per cent annually to 170 billion rupees to 180 billion rupees by fiscal 2034, while the lounge sector is seen growing by as much as 24 per cent to 165 billion rupees.

Travel Food Services, a joint venture between UK-based SSP Group and India's K Hospitality Corp, runs restaurants such as Jamie Oliver's Pizzeria, Krispy Kreme and KFC at 18 airports across India, Malaysia and Hong Kong, as well as 37 lounges.

Its three-day IPO that ends on Wednesday is an offer for sale, with its largest shareholder, the Kapur Family Trust, offloading a stake worth 20 billion rupees, or 13.81 per cent, at the top end of the 1,045 rupees to 1,100 rupees price band.

TFS had on Friday allotted shares worth nearly 6 billion rupees to large institutional buyers, including sovereign wealth funds ADIA and Norges.