Unusual fund raising idea
BrewDog considering £10m bond with payback partly in beer
Beer coupon: lenders may get payments in IPA
Brewer and pubs chain BrewDog may issue a £10 million bond that would repay lenders partly in beer.
BrewDog founder James Watt has floated the idea on its investor forum as the company looks to another fund-raising round.
“We are considering another £10m bond offering and this time we would pay the coupon 50% in beer and 50% in cash,” Watt wrote. “Meaning investors get an annual financial return and also an annual payment in beer!”
Watt wants to invest in distribution infrastructure and expansion in Australia, Germany and the US. He asked investors for feedback on the idea.
Sophie More, BrewDog’s head of marketing, told Yahoo Finance UK there were “no plans at this stage, just testing out an idea.”
“We often involve our community with new ideas or potential plans to get their feedback.”
BrewDog, known for its Punk IPA beer, has previously launched two “mini-bonds” targeting retail investors.
It successfully sold a £2.5m 4-year bond in 2016 that carried a 6.5% interest rate. Last year it raised £10m issuing a 4-year bond with a 7.5% interest rate.
Some may question why the company sees a need to repay lenders in beer, or any product, rather than cash, as is convention.
Both of its previous bonds entitled investors to a 10% discounts in BrewDog’s bars but did not include beer as a payment component.
The latest campaign builds on its unconventional fundraising techniques. It has raised over £70m through crowdfunding, using its own website and advertising on its cans, rather than using a crowdfunding platform.
Founded in 2007, BrewDog had revenue of £171m last year. It made an operating profit of £832,000 but a pre-tax loss of £576,000. It has breweries in Ellon, Aberdeenshire, Ohio, Brisbane and Berlin. The business has more than 60 bars globally and owns a beer-themed hotel.
The company raised £213m in 2017 from US private equity fund TSG Consumer Partners in a deal that valued it at £1 billion.