Billion-pound BrewDog fetches equity from the States

Billion-pound BrewDog fetches investment from the States

Current BQ cover stars BrewDog used the AGM on their tenth anniversary to reveal an investment deal of £213m from TSG Consumer Partners, valuing the firm at over £1bn.

“It’s intense today, but good!” James Watt says, as he chats to me from BrewDog HQ in Ellon, the Monday after he brought news of his investment deal to 7,000 of the firm’s 55,000 Equity Punks in Aberdeen. Captain and co-founder, James remains the primary investor in the firm and he and fellow founder Martin Dickie remain in control of the firm.  

So having previously raised substantial investments using the crowdfunding model, what pushed them to seek private equity investment?

“It’s not a shift away from crowdfunding; crowdfunding is integral to what we do and something we plan on doing going forward,” James tells me.

“At this moment, we have so many big growth opportunities and to take advantage of them we needed a serious capital injection.

“Our long term goal is a public listing and TSG have a long history of helping companies to grow and helping them go public.”

US private equity firm TSG are one of America’s longest established investors. Two of their current partner companies are Pabst and Duckhorn Wine Company.

James said: “We’ve been looking for a year and a half but we couldn’t find a partner who was aligned, who we felt believed the same things that we believed, and that bought into our business model and what we were trying to do.

“We met TSG in January [2017] for the first time. Instantly it was a good fit; we’ve had to turn down some offers which were better from a purely financial investment perspective – that partner selection was so key for us.”

James agrees that the investment deal was done quickly; their public status meaning due diligence was a quick and painless process, allowing him to announce the investment in front of the Equity Punk investors that are such an integral part of BrewDog’s business.

“We’ve got a five-year plan mapped out, but we want to achieve it in less than two years,” James says, casually, as if this isn’t a particularly big deal. Their focus is to add capacity in Ellon, add capacity in Columbus, and build a new facility in Asia: “We grew at 60% last year but that was constrained by our capacity, we’re forecasting to grow at 70% plus this year.

“We want to continue to invest in the things that we care most about, which is beer and people, and make other people as passionate about good beer as we are.”

As Peter Ranscombe discovered, BrewDog’s focus on beer and people extends beyond just their employed staff, already at 1,000 and growing, to the loyal fans who’ve invested their own cash in the firm to get it to this stage.

“The other side of the deal that we’re really excited about is that our Equity Punk community get to participate in the deal too,” he enthuses. “I think we’re the first crowdfunded company to have reached a billion-pound valuation.”

If beer was technology, BrewDog would be your latest Unicorn.

“Our Equity Punks, if they want, will be able to take advantage of the deal valuation – they can sell up to 15% of their equity. We took a bit of criticism when we launched Equity for Punks; people called it a glorified beer club, said it’s not a real investment… well, the people who invested in Equity Punks 1 or 2, their equity is now worth over 2,600% of what they paid for it.

“That’s a pretty outstanding return.”

The deal will see about £100m paid out to the brewer's co-founders, a further £100m go into the business, and the rest benefitting the Equity Punks. And with much of BrewDog’s success being attributed to that punk ethos, will this new investment and new valuation change the firm?

“For me it’s never been about size or scale, it’s always been about how we do things as a company – we want to be the best employer we can and we want to make the best beers we can,” James reiterates.

“We’ve always been scrappy and scruffy and definitely we’ll continue to be that, regardless of what size we are.”