Oatly Group AB has been giving more details about its upcoming launch in the Nasdaq Global Select Market in the US.
The Swedish oat milk company apparently expects to raise as much as $1.65 billion for itself and its investors, potentially giving it a total valuation of over $10 billion.
According to the latest update in its filing procedure which occurred on Tuesday it is due to offer 64.7 million American depositary shares (ADS) and expects an IPO price of $15 to $17 per share, with net proceeds to the company of $976.6 million at the middle of that range.
Already the company has attracted some major investment players with Scottish asset-management firm Baillie Gifford apparently up for buying as much as $500 million of the ADSs in the offering.
Some investors are hugely excited at the prospect of another vegan superpower with huge potential being listed in the US., They recall the way that Beyond Meat launched and quickly hit a market value of a whopping $11.7 billion.
From a European perspective it may be hard to fathom quite why the US is so excited by the IPO. The key might be that before Oatly launched in the US the alt milk market was dominated by soya and almond. Its arrival and subsequent deals with the likes of Starbucks and have driven massive growth in sales of Oatly to the point where some retailers have been complaining about not being able to access enough stock.
Oat milk is now the second most popular alt milk in the country after almond milk and Oatly is the leading player.
Yet the key question for investors is how long can it maintain that position.
As a product oat milk is relatively easy to create and scale. Oatly’s current position is the result of a combination of an excellent product with being first to market and backing it with hugely successful marketing campaigns.
Yet there are surely many major established players in the US food and drinks industry, potentially those who have significant cow;’s milk sales, who are eagerly eyeing the oat milk market.
In the short and medium terms, Oatly is going to need deep pockets to sustain its current elevated position.
One of the reasons why there’s so much investor interest in cultured meat and fish products is that they are based around intellectual property that can be protected. For many of the plant-based food pioneers their products can in theory be easily replicated and this applies to Oatly too.
So what will Oatly do with the cash it hopes it raise?
Apparently, it will use $188.3 million of the IPO proceeds to repay a “sustainability linked loan” agreement with a host of European banks, $10.8 million for a portion of its bridge financing, and the rest for working capital to fund growth.
It seems likely it will follow the Beyond Meat template of establishing itself quickly and then agreeing deals with established partners to take the brand in to new product areas.
Whatever happens this is an IPO to key a close eye on.
