Investors’ food frenzy after a decade of subdued IPO activity

The Swedish oat milk brand, Oatly, is the fifth food brand to recently announce plans to go public, after six others made debuts on the public markets in the past 12 months – more food activity in the markets than the entire decade before it!

The maker of oat milk known for its clever and ubiquitous advertising is the latest trendy brand to tap into what looks like an all-you-can-eat market for food IPOs. 

The sustainability-focused business is planning to list on the Nasdaq exchange, in what could be a $10-billion valuation, though the filing didn’t include those financial details. 

If recent history is any guide, its share price will look cheap by the end of the first trading day.

Each of the food listings in the past year have surged on opening day, following the benchmark set by Beyond Meat, which had a stunning first day when listed in May 2019. It has more than doubled in value since, as investors clamour for the stocks that offer sustainability benefits. But most of the past year’s listings have receded since listing.

Aside from Oatly, at least four more companies – celebrity-backed Flow Water, agtech unicorn AeroFarms, and Biltong-style meat snack maker Stryve and food-focused AF Acquisition Corp – are planning offerings this year, putting an end to a sleepy decade for food offerings that saw just four IPOs in the prior 10 years before Beyond Meat’s IPO.

Oatly, which was last valued at $2-billion, is reportedly eying a $10-billion listing. Its official filing showed 2020 revenue of $421-million with a net loss of $60-million. Investors include billionaire Oprah Winfrey and global investing firm Blackstone Group.

Food listings rarely come close to that $10-billion number, but the frenzy in the space resetting expectations.

Food delivery service DoorDash, which went public at the end of 2020, rose to a market cap of more than $60-billion within hours of listing. Impossible Foods is also rumoured to be testing the waters with a potential $10-billion valuation, while Instacart, another IPO suspect, would be more in line with DoorDash’s mega-listing in the tens of billions. 

So far, the recent deluge of food industry listings has been fueled by reverse-mergers known as SPAC listings, which have provided food startups with a cheaper and quicker avenue for going public than ever before (where, otherwise, a food company’s best bet was getting acquired by a publicly traded conglomerates, which pays much less)…. Read the full article