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Morning Briefing for pub, restaurant and food wervice operators

Wed 22nd Apr 2015 - BrewDog – new fund-raising creates £305m valuation
BrewDog – new fund-raising creates £305m valuation: BrewDog has stated that it will smash crowdfunding records if it succeeds in raising £25m in its latest share issue – £25m is more than five times the previous record set by the brewery in 2013. If the full £25m is raised, new B shares will account for 8.2% of the total issued share capital, suggesting the B shares are capitalised at £305m. BrewDog’s turnover is expected to exceed £50 million this year and the company is ‘yet to pay a penny for traditional advertising’. For the first time, BrewDog has also launched a ‘Punk to Punk’ referral scheme offering those who invest the chance to earn extra rewards by encouraging their friends to invest. All new Equity Punks will receive a unique referral code to share with friends and family to give them rewards. James Watt, BrewDog co-founder said: “The craft beer revolution has succeeded in redefining beer and Equity for Punks is redefining business finance. By making profit king, the financial institutions of the City gave rise to the bastardisation and commoditisation of beer. To grow BrewDog whilst being true to our values, we have had to build a whole new generation of business model. Equity for Punks puts the people who really care about our beer in control and keeps the passion and integrity in people’s beer glasses. We are not Rockefeller. We are Guy Fawkes. We are burning the established system – the status quo – down to the ground and forging a new future for business from the flames. We are putting the fat cats out to pasture and empowering everyone to be masters of their own destiny by investing in our passion for craft beer.” Last week, Watt reported that shareholders who invested in 2012 have seen their shares increase in value by 526%. Watt also suggested that BrewDog’s growth trajectory should mean its value is comparable to Shake Shack, which was valued at $1.6 billion in it recent IPO. Watt told shareholders: “Valuing a company that is growing as fast as BrewDog is always tough. Conventional metrics such as multiples of turnover or profit don’t really make sense when both of these figures are moving so fast that they are practically doubling year on year. With a fast growth company you are valuing the growth potential much more than you are valuing the conventional metrics and assets. Other fast growth companies use a free cash flow valuation model and this is what we have used to help us price our previous Equity for Punks share offerings and when assigning a value to BrewDog in the past. An example of a fast growth company that recently went public is Shake Shack – the chain of 63 burger restaurants that started in New York. Their recent share offer was fully subscribed and the US stock market valued them at $1.6 billion. They have 63 restaurants compared to our 30 bars. However in 2014 we made much more profit than them, grew much faster than them, opened in more new markets than them and our sector (craft beer) is growing much faster than theirs. Oh, and we have an awesome brewery too. If the US stock market values Shake Shack at $1.6 billion then we will let leave it up to our investors to decide what BrewDog is potentially worth.” Investors are being offered the following additional benefits: Lifetime discount in all BrewDog Bars of up to 10%; lifetime discount at its online shop of up to 20%; exclusive first options on all special and limited edition beers; a free birthday beer, every year, on us; Access to BrewDog’s EFP BottleBox beer club £10 worth of Beer Bucks as a welcome gift. In addition, those investing over £950 will get a free 12 month membership to the Abstrakt Addict Club, which is worth £135. And those investing £1,950 and above will claim a years free membership to the Abstrakt Addict Club and a years free membership to BrewDog’s new EFP only BottleBox beer club.

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