Craft beer maker BrewDog turns to Crowdcube for GBP25M fund raising

September 7
6:59 PM 2015

As part of its business expansion drive, craft beer maker BrewDog is raising funds through Crowdcube, which is UK's biggest crowdfunding platform. The Scottish BrewDog will raise GBP 25million though two crowdfunding routes by next April. 

BrewDog's crowdfunding routes involve offering of shares and bonds. The minimum investment in shares is GBP95 for two equities and GBP 500 in unsecured fixed bond with four year term. The bonds fetch investors a 6.5 percent fixed rate.

Established in 2007, BrewDog has bars across the UK. The joint offering of shares and bonds on its platform is the first time for Crowdcube. And also this is first time offering of bonds from BrewDog as well. 

The fund raising on Crowdcube platform is part of the BrewDog's crowdfunding drive, Equity for Punks IV. This is the BrewDog's fourth funding drive began in April 2015 and will conclude by April 2016. 

So far, BrewDog has raised all of its fund raising plans from its own site. This time only it shifted its focus to crowd funding. 

BrewDog has completed fund raising of GBP5million though Equity for Punks IV in just 20 days. It further raised GBP3million in the next three months. 

Crowdcube has so far managed the raising of GBP100 million from investors since 2011. Crowdcube has over 200,000-strong community of investors. BrewDog is using Crowcube platform for raising money by tapping its resources.

BrewDog has also plans to expand to the US. It has already acquired land of 42 acres in Columbus, Ohio, for setting up a manufacturing facility with capacity of 200 barrels. 

The US market has good potential for craft beer market, but BrewDog finds it difficult to market the Scotland made beer in the US.

The company is expecting to make the beer production facility in Ohio operational by summer 2016. The company is also planning to export the craft beer produced in Ohio to neighboring countries such as Canada and South America. 

According to All Street, a crowdfunding research firm, BrewDog's valuation is pegged at GBP 305 million considering GBP47.50 each share translating into 115 times earnings. Whereas, most of the listed breweries are trading at 25 times of average earnings. However, BrewDog defends it by saying that company's high potential growth rate will justify it. 

BrewDog's turnover rose 63 percent to GBP29.6million in 2014. Operating profit was up 56 percent to GBP3.9 million. 

The company will use GBP25million to open more new craft beer bars in London and Glasgow. The other plans include setting up a craft spirit distillery, opening a sour beer brewing facility, a craft beer hotel in addition to investing in eco-friendly technology.

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