Brewdog investors will ‘struggle’ to make a return

As craft beer company Brewdog announces it is already £5m into its record £25m crowdfunding scheme, an analyst has warned that investors will find it difficult to make a financial return.

Brewdog recently staged a publicity stunt featuring a helicopter and some stuffed “fat-cats” (Photo: Brewdog)

The £5m milestone has been marked with an elaborate PR stunt in which Brewdog founders Martin Dickie and James Watt dropped stuffed “fat cats” over the City of London from a helicopter.

However, this affected celebration may be subdued by a statement from the CEO of All Street – the first financial analysis firm dedicated to monitoring crowdfunding schemes – who said it was “difficult to see how investors will make a financial return on this deal”.

Emanuela Vartolomei, chief executive of All Street, noted the “high” £305m company valuation and a lack of clear forecasts in her judgement of Brewdog’s investment potential.

“There is very little clarity as to how the company will hit the revenue targets required to generate a risk adjusted return for investors,” she told the Financial Times.

“It is a strong company with sustainability at its heart and a talented workforce,” and one that has performed extremely well, with turnover growing 64% last year, but it still cannot inspire serious confidence from investors in this scheme, she argued.

In the confrontational fashion that symbolises the Brewdog style, co-founder James Watt has responded by telling potential investors to look at the company prospectus for themselves rather than “relying on what All Street or, for an alternative view, what the Motley fool might say who offered a different opinion to that of All Street.”

“All investment opportunities attract a host of contrasting opinions from the supposed experts,” he said, pointing out that the BrewDog plc offer for subscription to issue B shares at a price of £47.50 each “is made in accordance with a prospectus which has been approved by the Financial Conduct Authority (FCA) in accordance with the prospectus rules.”

However, Brewdog has been met with other problems in this area.

Last month, the company was forced to email potential investors to tell them that they did not have official backing from the UK Listing Authority, a division of the Financial Conduct Authority.

This was after Brewdog sent an initial email saying that the crowdfunding drive had been endorsed by the authority, rather than having simply received approval from it.

The financial watchdog also said Brewdog broke rules regarding its future prospectus when it contacted investors. Brewdog quickly contacted everyone again to clarify the FCA’s issues and are now “fully compliant”, according to its founder, Martin Dickie.

The £25m Equity of Punks crowdfunding drive, the second in its seven-year history following a £4.3m fundraiser in 2013, is in an effort to fund further expansion of the business, including the building of a new 300 hectolitre brewhouse, more new bars and other projects such as its “craft beer hotel”.