Mexican-flavoured fast food chain Guzman y Gomez (GYG) has listed on the ASX for $3.3 billion. Prices surged 36 per cent on the expected $2.2 billion float with shares priced at $30 at the end of the first day instead of the $22 offer price.
Steven Marks, co-founder and co-CEO said, “Guzman y Gomez is pleased to have listed on the ASX today. Whilst this is a significant milestone for GYG, we are still early in our mission to reinvent fast food and change the way the masses eat.
“We couldn’t have achieved this without our amazing team and franchisees, or the firm support of our exceptional investors. We also look forward to welcoming our new investors to the register.”
Guy Russo, GYG chair, said “The board, senior management and existing substantial shareholders will retain approximately 58 per cent of the business on a fully diluted basis and approximately 54 per of shares on issue will be subject to voluntary escrow arrangements (including shares to be issued under the franchisee offer).”
Major shareholders TDM, with a 26.2 per cent share, and Barrenjoey, holding a 9.6 per cent stake, have agreed not to sell any shares until the results of the financial year are unveiled in 2025.
GYG ASX share price not without sceptics
However, the burrito business’ high-profile flotation has commentators divided over the offer, which was available only to existing shareholders, investors, brokers, employees and franchisees.
The IPO prospectus contained multiple ways to value the business, said the AFR, and that has led some analysts to question the high valuation in the long term. Morningstar Investors was among the critics, suggesting prior to the float on Thursday 20 June the share value should sit around $15.
Sceptics also drew attention to the costs and logistical challenges of achieving the exponential growth projected in which the drive-through restaurant model will play a prominent role.
GYG has 183 stores in its Australian portfolio, 16 restaurants in Singapore, five in Japan and four in the US, in the Chicago area. In the medium term it plans to add 30 new restaurants in the domestic market each year for the next few years. This will rise to 40 restaurants annually within five years.
However, the AFR pointed out, well-established brands McDonald’s, Subway, KFC, Domino’s, Hungry Jack’s, Red Rooster and Pizza Hut are the only QSRs in Australia to have a footprint of 270 stores or more.
Driving long-term growth and value for shareholders
Russo said the 18-year-old business is confident it can continue its “strong QSR offering, brand appeal and continued business excellence over time”.
“As we continue to build GYG, we remain focused on driving long-term growth and value creation for our shareholders,” Russo said.
GYG has outlined ambitious global plans to reach a footprint of 1000 restaurants.
