The Financial Times (26th June) reports that smaller Brewdog Investors are starting to bark.
Brewdog made a £7.4m loss in 2020 from a £3.7m profit in 2019 but looks to have weathered the pandemic times better than many, with a move into canning and delivery.
Its not the financial performance as such that is currently of concern but rather the reputational damage that may follow after recent complaints by former employees, ultimately not denied by Brewdog, that far from its progressive image, working for the Company is not a great experience (at best).
The Financial Times (26th June) has been talking to some of Brewdog’s smaller investors. As usual with the FT the article is paywalled but you may be able to get access.
I highlight a few of the key points below.
Smaller investors have put in £80m to Brewdog. The FT notes that for many it’s a sort of loyalty card allowing for reductions on beer and so on. However there are larger investors who look to make financial returns.
The FT has spoken to one early investor who has made a decent return.
However with private equity specialist TSG taking a 22% stake the financial picture is now different. In the event of an IPO or sale TSG gets priority on returns and this is set at 18% compounded.
Brewdog’s latest crowd-funder, which they have said will be the last values the company at 10 times net revenues while Heineken and Coors tend to value at 2-4 times.
The bottom line issue is how the fall-out from how its been treating employees may impact on a flotation or sale of Brewdog, since if consumers turn away from the beers, sales will be hit as will revenue.
If that occurs then the guarantee of returns for TSG could be at the expense of the larger smaller investors. No wonder they are beginning to bark.
I should add I’m not an investor. I’m only here for the beer, although at the moment only after Brewdog finally do the right thing and recognise a trade union.
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