Oatly evaluates fundraising options ahead of possible IPO, sources say

05 February 2020

Oatly could raise as much as USD 100m from new investors • Company could seek IPO within 18-24 months, with New York, London likely venues • Beyond Meat seen as likely comp
Oatly, a Sweden-based maker of oat milk, is evaluating fundraising options as well as potential exit scenarios, including an initial public offering, that could come within the next 18-24 months, said two sources close to the matter.
The company has been working with Goldman Sachs since late last year on these options, but the investment bank has not yet been formally retained, said the first source.
Goldman Sachs and Oatly declined to comment.
Headquartered in Malmo, Oatly is a 20-year-old researcher and maker of oat-based products, seen as a pioneer in the oat milk industry. Known for its quirky packaging, it went viral after launching in the US, resulting in an oat milk shortage in 2018.
The Swedish company is currently talking to international investors as it looks to raise outside capital, said the second source close and another two sources familiar with the situation.
It could raise around USD 100m in growth capital this year, said the first, third and fourth sources. The company could raise the capital as soon as the first half of 2020, said the second source.
An alternative to outside capital would be to raise around USD 20m from existing investors, said the 
Oatly evaluates fundraising options ahead of possible IPO, sources say 05 FEB 2020
Oatly evaluates fundraising options ahead of possible IPO, sources say
first source, noting it executed similar fundraising rounds in 2018 and 2019, respectively. Oatly is well-funded by its financial backers and likely to only accept new investors if they can provide a compelling value-add, such as name recognition or resources, he said.
In 2016, Oatly was acquired by a newly formed joint venture between Belgium-based private equity firm Verlinvest and Hong Kong-based China Resources. The JV owns about 65% equity, he said, noting that the company used the investment to expand in the US and Europe.
Other investors include Los Angeles-based private equity firm Strand Equity Partners, according to its website. The Baltic Sea Foundation Industrial Fund owns roughly 5% equity, said the first source.
A final round of private capital would allow Oatly to set a valuation ahead of a potential exit, said the fourth source.
In the event of an IPO, Oatly could look to list in New York, said the first source. The London Stock Exchange is also an option, since Oatly’s biggest investors are in Europe and Asia and its European business is substantially larger than its US business, he said. In the future, it could consider a dual listing, he noted.
In lieu of an IPO, Oatly could also consider a sale, said the first source, noting it is keeping all options on the table.
Logical suitors include major consumer packaged goods (CPG) companies, including Nestle [SWX:NESN], Unilever [NYSE: UL], Pepsico [NASDAQ: PEP] and Coca-Cola [NYSE: KO], he noted. Dairy strategics could also be logical bidders, such as Canada-based Saputo [TSX: SAP], he said.
France-based dairy strategic Danone [EPA:BN], however, already owns US soy and almond milk brand Silk as well as Belgian soy specialist Alpro, which is Oatly’s top global competitor, said the first source.
Other competitors include privately held US companies Chobani—which announced in November 2019 that it will launch a line of oat-based products in 2020—and Massachusetts-based HP Hood (aka Planet Oat).
In January, Los Angeles-based Califia Farms announced it raised USD 225m in Series D funding. It 
Oatly evaluates fundraising options ahead of possible IPO, sources say | Mergermarket
was valued at around USD 800m, according to a December Mergermarket report.
Plant-based comps
A likely comparable would be Beyond Meat [NASDAQ:BYND], the sources and several sector advisors said.
Other comps could include Redwood City, California-based Impossible Foods and Denver-based WhiteWave Foods, before it was acquired by Danone [EPA:BN], said the second source.
Beyond Meat’s listing last year created strong interest in the US plant-based foods category, the first source said. In July 2019, the Los Angeles-based company priced its IPO at USD 25, raising USD 276.7m from the sale of an 18.52% stake, which valued it at USD 1.49bn, according to Dealogic data. Acuris and Dealogic are both owned by ION Group.
Beyond Meat shares closed up 163% at the end of their first trading day and are now trading at USD 110 per share, giving it a market capitalization of USD 6.79bn. Goldman Sachs acted as a lead bookrunner on Beyond Meat’s IPO, alongside JP Morgan and Credit Suisse.
Meanwhile, Impossible Foods is also reported to be in the market for a late stage private fundraising, aiming to fetch a USD 3-5bn valuation in a USD 300-400m round, according to a November newswire report. It could go public as soon as this year.
This month, Starbucks announced a deal to add Oatly to roughly 1,300 Midwest menus, much like Beyond Meat’s partnership with Dunkin’ restaurants and Impossible Foods’ partnership with White Castle.
However, an industry executive said restaurant menus give Beyond Meat a stronger growth position than coffee shops. A food investor said Oatly is not as disruptive as Beyond Meat, since the alternative dairy category is already somewhat mature because of almond and soy milk.
Beyond Meat has greater growth opportunity and, therefore, deserves a stronger multiple, said the investor.
Oatly evaluates fundraising options ahead of possible IPO, sources say 

Still, Oatly is larger than Beyond Meat was prior to its IPO, said the first source. It currently generates around USD 200m in revenue, according to the first and fourth sources.

It surpassed USD 100m in revenue in 2017 and has seen triple-digit annual growth for three years in a row, said the first source. It is not yet profitable but could be by next year, he said.
The company aims to double in size to USD 400m in revenue this year thanks to its global expansion strategy, said the first source. By then, it hopes to have five factories worldwide: two in the US (New Jersey and Utah), two in Europe (Sweden and the Netherlands) and one in Asia (Singapore).
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