The founders of BrewDog could pocket as much as £100m after selling a slug of the Scottish craft beer maker to an American private equity giant.
The 34-year-old schoolfriends set up the company in Fraserburgh, Aberdeenshire, with a £20,000 bank loan.
TSG Consumer Partners is splashing out £213m on a 22% stake in the Punk IPA brewer, giving the 10-year-old business an enterprise value of £1bn.
The deal with the San Francisco buyout firm, owner of snack brand Popchips and Glaceau Vitaminwater, will serve up big windfalls for James Watt and Martin Dickie. The 34-year-old schoolfriends set up the company in Fraserburgh, Aberdeenshire, with a £20,000 bank loan.
It is believed to be one of the biggest-ever paydays for entrepreneurs who have tapped online crowdfunding platforms for capital. The company raised more than £50m this way, and has more than 55,000 small shareholders.
BrewDog has developed a cult-like following, helping it to become one of Britain’s fastest-growing private companies of recent years. It started by selling bottled, heavily hopped beers before opening its first pub in 2010 in Aberdeen.
It now has more than 800 staff, dozens of bars across Europe and is expanding rapidly in America, where it is building a brewery near Columbus, Ohio. Revenues topped £71m last year, with pre-tax profits of more than £7m.
TSG is investing £100m in BrewDog. It is also buying £113m of shares from existing investors. The founders are expected to bag the bulk of the bonanza. Yesterday, BrewDog said Watt’s stake would reduce from 35% to 25% and Dickie’s holding from 30% to 22%.
There is potential for other shareholders to revolt, however. Smaller investors will not be able to sell such large proportions of their stakes. BrewDog will allow them to offload just 15%, up to a maximum of 40 shares.
At a shareholder meeting last month, some 95% of shareholders backed amendments to the company’s articles of association, which paved the way for the American investment. One of the motions gave the company the right to temporarily remove “pre-emption rights”, which ensure that all shareholders are treated equally in a fundraising.
Another measure allowed for the creation of a new class of preferred shares, which will guarantee TSG a minimum compound annual return of 18% if the company is bought or floated.
BrewDog has vowed never to sell to a “monolithic purveyor of industrial beer”. It has revelled in its outsider status, labelling its financing programme “equity for punks”.
However, its fundraising campaigns have drawn criticism. The UK Crowdfunding Association accused the company of not making the investment risks clear to online backers.
Yesterday, Watt said the TSG investment vindicated their fundraising strategy. An investor who backed BrewDog in 2010 will see the paper value of their holding rise by 2,800%, he claimed.
“This sheds a new light on crowdfunding,” said Watt, who graduated from Edinburgh University with a degree in law and economics before getting into brewing.
“It shows that it is no longer just alternative finance — it’s a good business model for any consumer-focused company. We don’t see ourselves as having 55,000 investors, we see ourselves as having 55,000 ambassadors.”
BrewDog is hoping to launch breweries in Australia and Asia in the near future.
Blythe Jack, managing director at TSG, said that the founders’ vision had inspired the private equity house to hand over the hefty cheque. “We have every belief that BrewDog is going to pave the way in the craft beer revolution in Europe and beyond,” she said.
The Sunday Times
If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates.
Terms of Website Use
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned