Shares in SSP Group plc (LSE:SSPG) climbed 4% after it announced overnight the planned initial public offer of its Indian joint venture Travel Food Services (TFS).
The Upper Crust owner currently owns a 49% stake in TFS but prior to the IPO it expects to purchase additional shares to take this up to 50.01%, while joint venture partner K Hospitality Corp's owners, the Kapur Family Trust, will be the selling shareholder in the IPO.
Pricing and completion of the IPO is targeted for spring 2025.
"India is an attractive and strategically important market for SSP, aligned to our prioritisation of high growth geographies with the greatest long-term returns opportunities," said SSP chief executive Patrick Coveney.
SSP, which first bought shares in TFS in 2016, has spent a net £57.9 million for its current stake.
House broker Shore Capital estimated that TFS accounted for circa 1.5p of group earnings per share in 2024, excluding interest income.
"Given the track record, favourable demographics and continued investment in airport infrastructure, we would expect TFS to command an attractive rating, noting the premium valuation of comparable listed food service stocks in India," analysts said.
"We see the planned IPO as a a way of shining an implied light on what has been built to date in India and allow the market to ascribe a value on the evolving opportunity, with the look-through valuation likely putting downward pressure on the implied multiples on the rest of the group."
The shares were changing hands for 193.9p, up 7.1p on the day.