UPDATE: Feb. 5, 2021: Oatly is reportedly considering seeking a value of around $10 billion in a U.S. IPO that could come as soon as May, Bloomberg reported, based on conversations with people familiar with the matter. The report said details could change in the coming months.
- Oatly is looking into various funding options and possible exit scenarios, including an initial public offering in the next 18 to 24 months, according to unnamed sources cited in a report from Mergermarket sent to Food Dive. The report also said Oatly has been working with Goldman Sachs on several strategic options since late 2019, but has not formally retained the financial services firm.
- Mergermarket's sources said Oatly could raise $100 million in growth capital from international investors, potentially during the first half of this year. It could also tap existing investors for additional funding, which might bring in $20 million, one source reportedly said.
- Oatly's IPO could occur in New York, London or possibly both cities, the report says. Another option Oatly is reportedly considering is to sell itself to a large CPG company such as Nestlé, Unilever, PepsiCo, Coca-Cola or Canadian dairy firm Saputo.
It's hard to tell at this stage which direction Oatly will take. But given the popularity of its products — Mergermarket's sources said the firm has seen triple-digit annual growth for three years running and posted revenue of more than $100 million in 2017 — it could be profitable by 2021 if its plan to double U.S. revenues to $400 million this year pans out.
Oatly's executive team and investors reportedly noted Beyond Meat's successful IPO last May, when the company became the first plant-based food manufacturer to go public on a major exchange. The plant-based food maker's stock zoomed 163% from $25 per share to $65.75 the day it debuted. Although it has since had its ups and downs, the stock surged 46.1% just last month. That success has without a doubt tempted other plant-based manufacturers to consider going public and raising more funds.
Oatly has recently been positioning itself for greater growth, which could expand its strategic options. Last month, it announced a partnership with Starbucks to serve as its oat milk supplier for a trial run in 1,300 cafes in the Midwest. The company also launched its first national U.K. campaign beyond London last month to reach out to potential customers about "the post-milk lifestyle." On the non-dairy frozen dessert side of its business, Oatly has partnered with Evergreen Packaging on 100% renewable paper-based packaging.
Should these initiatives give a significant boost to Oatly's profitability plan, the company could be an appealing acquisition target to the right suitor. This would be the second time the company has been acquired. In 2016, Oatly was bought by a joint venture between Verlinvest, a Belgium-based private equity firm, and China Resources of Hong Kong. Verlinvest is owned by two families holding significant equity in AB InBev. According to Mergermarket, that joint venture owns about 65% equity in Oatly, with other investors including Sweden-based VC firm Industrifonden, Strand Equity Partners of California, the Baltic Sea Foundation Industry Fund, the company's founders, private individuals and employees.
However, Oatly CEO Toni Petersson played down selling the company last year in an interview with the U.K.'s Press Association, indicating it could eventually go public. Petersson credited Oatly's popularity to tapping into the global movement toward a more sustainable world, adding oat production is much more sustainable than soy and almond. But it still could be a challenge for Oatly to see the same success as Beyond Meat, which had a first mover advantage on the exchange.
Oatly's competitors in the oat-based beverage space are growing. Belgium's Alpro, which Mergermarket called Oatly's top global competitor, also makes a variety of oat-based beverages, and yogurt giant Chobani just rolled out organic Chobani Oat beverages in January. Additionally, plant-based manufacturer Califia Farms raised $225 million last month in Series D funding and is currently valued at about $800 million, Mergermarket said. Califia, which also makes oat-based beverages, plans to use the money to launch additional products and expand globally.
The plant-based food and beverage market is growing rapidly, which will likely help Oatly as it considers its options. According to a report from BIS Research last year, the market is projected to hit $80.43 billion by 2024, rising at an annual growth rate of 13.82%. This growth stems from more health-conscious consumers, increasing demand for food safety and rising concern about animal welfare, the report said — all factors expected to grow stronger in coming years.