Oatly Aims for a $1.1 Billion IPO
Oatly, the popular plant-based dairy company, is set to have its public debut this week.
It’s expected to start trading Thursday, May 20, on the Nasdaq under the ticker symbol “OTLY.” The company is expected to price its IPO between $15 and $17 per share. It plans to offer 64.7 million shares. This pricing could value the company near $10 billion with hopes of raising up to $1.1 billion in its IPO.
Oatly is a Swedish company that was founded in 1994 by Rickard Öste, who is a professor of food chemistry and nutrition, and his brother Björn Öste. The company has been backed by celebrity investors like Jay-Z, Oprah Winfrey, and Natalie Portman.
Underwriters for its IPO include Morgan Stanley, J.P. Morgan, Credit Suisse, Barclays, Jefferies, BNP Paribas, BofA Securities, Piper Sandler, RBC Capital Markets, Rabo Securities, William Blair, Guggenheim Securities, Truist Securities, CICC, Nordea, Oppenheimer & Co., SEB, Blaylock Van, C.L. King & Associates, Loop Capital Markets, Ramirez & Co., Siebert Williams Shank, and Tribal Capital Markets.
The company calls itself the original oat drink company. Oatly turns liquid oats into vegan food and drinks. Oatly offers its oat milk, ice cream, yogurt, cooking creams, spreads, and on-the-go drinks through retail locations and online. By the end of 2020, it had sold its products through 60,000 retail stores and 32,200 coffee shops as well as through online retailers like Amazon.
Oatly’s IPO wouldn’t be the first in this market of plant-based food and drink alternatives. Beyond Meat (NASDAQ: BYND) took the market by storm when it went public in May 2019. It shook up an industry that was very comfortable with having little to no competition. It also brought to light a significant amount of demand for plant-based meat alternatives. Consumers were interested in changing up their diets, especially with healthier options. And investors saw an opportunity in Beyond Meat, which would pave the way in disrupting a traditional market.
Now, this week we are about to experience another plant-based startup go public and make a big splash in the IPO market, similar to what Beyond Meat did in 2019. Oat milk has become a popular alternative to dairy milk. It's even more trendy than other milk alternatives, like soy milk and almond milk. Oat milk doesn’t use as much water for its production as almonds, and oat milk’s texture makes it the alternative of choice for baristas because it is easier to froth and heat than other milk alternatives.
The New York Times reports, "In the United States, milk substitutes like oat milk and rice milk make up a $2.5 billion industry that is expected to grow to $3.6 billion by 2025, according to Euromonitor. Globally, the $9.5 billion industry is expected to grow to $11 billion." As you can see there is room for growth in this market in the next few years. Some of the factors that are driving this market’s growth are the shift in consumer preferences — people are choosing alternatives to animal-based products because plant-based proteins are seen as being better alternatives when it comes to health and the environment.
The company’s recent financials indicate that as of March 31, 2021, Oatly had $105.4 million in cash and $353 million in total liabilities. Its free cash flow during the 12 months ended on March 31, 2021, was at negative $227 million. Oatly’s expected IPO is set to be massive — over $1 billion if successful, which would push the company’s valuation to over $10 billion.
Keep an eye out for Oatly’s market debut on Thursday, May 20.
Until next time,