Romanian investors Lucian Vlad and Nicolae Badea have raised RON 285 million (EUR 62 million) from selling 25% of the restaurant company Sphera Franchise Group on the Bucharest Stock Exchange.

The company, which owns the KFC, Pizza Hut and Taco Bell franchise in Romania, was thus valued at over EUR 245 million, some 22 times its net profit from 2016 (EUR 11.3 million).

This is the first company in the local restaurant sector that lists its shares on the Bucharest Stock Exchange. The shares will start trading on November 8.

The initial public offering closed on Thursday, November 2, at a price of RON 29 per share, at the half of the subscription interval. The two investors put up for sale 9.8 million shares at a price ranging between RON 25 and RON 33 per share.

Some 95% of the shares were sold to institutional investors while only 5% were allotted to individuals. The individual tranche was initially 15% of the total offer but the IPO managers decided to allot more shares to institutionals as the retail tranche was not fully underwritten.

Czech brokerage firm WOOD & Company acted as Sole Global Coordinator and Joint Bookrunner in connection with the offering. Raiffeisen Bank (Romania) was Joint Bookrunner and Alpha Finance Romania was Co-Lead Manager.

Sphera Franchise Group is one of the biggest restaurant operators in Romania, with RON 516 million (EUR 113 million) in sales in 2016, up 27% over the previous year. The group’s net profit reached RON 51.6 million (EUR 11.3 million) last year, up 9% year-on-year.

The group had a total of 104 units as of 30 September 2017, comprising 67 KFC restaurants (63 restaurants located in Romania, two restaurants located in the Republic of Moldova and two restaurants in Italy), and 37 Pizza Hut units (of which 16 are delivery units). In October, it opened the first Taco bell restaurant in Romania.

Local investor Radu Dimofte holds a 44% indirect stake in the company. Lucian Vlad and Nicolae Badea, who sold some of their shares in the IPO, still hold about 31% of the company’s shares.

Sphera Franchise Group has also strengthened its management team recently. It has hired Stylianos Bairaktaris, the former CEO of local brokerage firm Alpha Finance Romania, as financial director. The company has also named Israeli-born entrepreneur Ely Davidai as vice president of its board of directors. Davidai is known for bringing the Pepsi franchise to Romania in 1992.

editor@romania-insider.com