Malaysian fast food operator QSR taps banks for $500 million IPO, say sources: Reuters

Malaysia’s largest fast food operator QSR Brands has hired three banks, including Citigroup (C.N) and Credit Suisse (CSGN.S), to lead its initial public offering (IPO), two sources with direct knowledge of the matter told Reuters.

Malayan Banking Berhad (Maybank) (MBBM.KL) will also be one of the three lead banks for the offering, the sources said. They did not want to be named as the talks are private.

The date for the IPO, which could raise about $500 million, is not certain but is likely for some time in 2017, the sources said.

CIMB Group Holdings (CIMB.KL) and RHB Bank (RHBC.KL) will also be involved though not as the lead bankers, they said.

QSR declined to comment. Citigroup, Credit Suisse and CIMB declined to comment, while Maybank and RHB did not immediately respond to requests for comment.

QSR operates and manages the Kentucky Fried Chicken (KFC) and Pizza Hut restaurant franchises in Malaysia. It is the sole KFC franchisee in Malaysia, Singapore, Brunei and Cambodia.

The company also runs an integrated upstream poultry production and processing business in Malaysia which supplies the bulk of its chicken requirements in the country.

QSR is owned by private equity firm CVC Capital Partners Ltd [CVC.UL], Malaysia’s largest pension fund – the Employees Provident Fund, and the investment arm of Malaysia’s Johor state, Johor Corp [JOHOR.UL]. The consortium took QSR private in 2013.

CVC and EPF are looking to exit their investments in QSR through the IPO, while Johor Corp will continue to hold a stake, the sources said.

“Johor will remain as a long term investor in QSR,” said one of the sources.

The second source said the offering could draw strong investor interest.

“QSR is the dominant player in Malaysia, bigger than McDonald’s. There is a scarcity of good consumer names and sizeable IPOs,” said the second source.

Malaysia’s IPO market has been slow in recent years as its currency took a hit from the sustained volatility in global commodity markets. The Southeast Asian IPO market has also been muted, as global economic headwinds dented investor sentiment.

But a few offerings could hit the market next year. Property developer Eco World Development Group’s (ECOW.KL) international unit will list in the first quarter of next year with an aim to raise nearly $500 million.

Syed Mokhtar Al-Bukhary, who controls utilities and infrastructure company MMC Corp (MMCB.KL), plans to list some of the company’s port assets next year in an offering that could raise at least $700 million, the Wall Street Journal reported earlier this year.