KEY POINTS:
Burger Fuel majority owners Josef Roberts and Chris Mason have had to take a bigger bite of the fast-food chain after its share float raised a little over one-third of the original target.
The company had aimed to raise up to $15 million, with a minimum of $8
million, to take a place on to the NZAX.
Yesterday company chairman Peter Brook said total applications from 2380 shareholders had reached just $5.25 million.
This means Roberts and Burger Fuel founder Mason will chip in with $2.75 million to reach the $8 million threshold after splitting the remaining shares in the public pool.
Roberts says that he is "wiser now" after the float.
"It was a new experience and we know better how it works," he said.
The Burger Fuel stock will start trading on the NZAX today. The IPO (initial public offering) closed on Monday, having been extended by a week.
The company had a minimum subscription of just 1000 $1 shares, which it offered to customers at Burger Fuel.
The chain has 19 franchises and two outlets.
Roberts said the lower-than-expected outcome was due in part to negative media coverage but he acknowledged the company had overestimated the likely degree of support from brokers for such a small float.
It had sought customers as shareholders but the advertising, which included a TV campaign, aimed to promote the Burger Fuel brand as well as the float, he said.
That advertising - which was heavy for such a small float - had boosted sales at the chain.
At the proposed $15 million, that public float would have represented 25 per cent of shares, valuing the company at $60 million.
Roberts stood by the valuation, which he said represented the future expansion plans for the company.
But with Roberts and Mason forced to top up, independent shareholders have just 8.75 per cent of Burger Fuel.
The outcome means the two men own 90 per cent, with 34 per cent of the portion traded on the NZAX.
Brook said yesterday that the reaction to the float might have been affected by the emphasis on marketing Burger Fuel shares to customers.
The company was using the money to expand the chain in New Zealand and Australia and had looked at different options depending on the outcomes.
It would use the new capital to secure prime locations and undertake preliminary fit-out work.
Roberts said that with a lesser amount of capital the company was likely to move some new branches directly to franchises rather than holding them in company ownership at the start.
The franchise approach meant that the capital could be recycled and invested in new sites and fit-outs.
In Australia, where Burger Fuel already has one franchised store, the company would use the same franchise model as in New Zealand to expand.
Brook said that when expanding to new territories the company was planning to develop new stores with other partners to avoid the need for capital. However, he did not identify the potential partners.
On the menu
* The Burger Fuel IPO aimed to raise up to $15 million with a minimum of $8 million.
* Total applications raised $5.25 million.
* Founding shareholders Josef Roberts and Chris Mason will buy $2.75 million worth of shares to take the total to $8 million.