Guzman y Gomez attracts four new investors as Mexican fast food chain hits $1.7bn valuation

Homegrown Mexican fast-food chain Guzman y Gomez has lured four new investors to its share registry and is committed to an IPO.

Guzman Y Gomez joint chief executives Hilton Brett and Steven Marks.

Mexican-themed fast-food chain Guzman Y Gomez has attracted four new investors in a $134.5m liquidity round that has given the Australian business a $1.73bn ­valuation.

The rapidly expanding chain has been laying the groundwork for an IPO, and said on Tuesday it had added Cooper Investors, Hyperion Asset Management, Firetrail Investments and QVG Capital to its register.

Existing investors including Athletic Ventures, Aware Super and TDM Growth Partners added to their shareholding in the financing round.

The chain is still generating bottom line losses as it remains in its growth stage, with a $3.9m loss in the December half.

The proceeds of the raising will support Guzman’s three-year growth strategy, including Australian and overseas expansion plans.

The bulk of its stores are in Australia, numbering 183, while it has opened four stores in the US, 17 in Singapore and five in Japan. It is aiming to open 30 to 40 stores per year over the long term with a target of 1000 stores in Australia eventually.

In a statement, Guzman y Gomez reaffirmed that it continued to review the possibility of an IPO in the coming 12 months, subject to market conditions, and would seek the required shareholder approvals to provide the flexibility to pursue this.

Guzman y Gomez founder and co-CEO Steven Marks told The Australian in February that an IPO could be triggered either this year or in 2025.

“We have always had aspirations that at some point in time we will IPO this business, but that will always be dependent on market conditions at the time. At this point our thinking it is either late this year or next year – just really depends on conditions at the time,” he said.

Mr Brett said growth and differentiation in the market were key pillars of any business seeking an IPO, but it would also eventually become profitable.

First half results handed down in February showed that although Guzman y Gomez reported a statutory net loss, its underlying earnings rose to $21.2m, up 64 per cent. Its same-store sales for its Australian network rose 11 per cent, while sales in Japan rose 39 per cent, 15 per cent in the US and 9 per cent in Singapore.

Hyperion Asset Management lead portfolio managers Mark Arnold and Jason Orthman said the fast food chain had a sound growth strategy that would put it on the path to becoming a significant global player.

“We are attracted to the company’s superior unit economics, underpinned by an innovative ‘fresh and fast’ consumer offering,” the fund said. “Guzman y Gomez has a well-defined growth pathway which we anticipate will see it scale well beyond its current footprint within Australia in the coming years. Over time, GYG has the potential to become a significant global business.”

In 2023 Guzman y Gomez appointed TDM partner Hilton Brett as a co-CEO, a move viewed by some as a precursor to the chain eventually seeking an IPO.