Oatly — $10B Valuation

Superstar company Oatly is taking their company public.

Consumers love Oatly. They love dairy alternatives and food alternatives in general. Companies like Oatly are new and hot in the market and that’s exactly what new age consumers enjoy.

What exactly is Oatly though? They’re a producer of oat-based food products for a healthy lifestyle based in Malmö, Sweden. The company’s product range includes oat milk, ice cream, cold coffee, yogurt substitutes, cooking cream, spread and custard that can be used in various recipes, breakfast, main courses, desserts, baking products and dressings. With 550 employees and a long history of funding they are now ready to take their company public.

They sell their Oatly brand of products in more than 20 countries across Europe and Asia, and they’ve hired Morgan Stanley, JPMorgan and Credit Suisse as underwriters on the offering.

The planned stock market listing comes as the plant-based food sector has gained investor attention over the past few years, especially as fast-food chains and upscale restaurants create new menus to attract health- and environment-conscious diners.

Oatly, is primarily known for its oat milk products, and has tie-ups with several cafes in the United States, including Starbucks and also sells its products online and in retail stores.

Much of the demand for plant-based food is being led by millennials and generation Z consumers, who are more than willing to spend on sustainable products that are also healthy.

Let’s talk about their funding history. Oatly raised a $200 million equity investment in July last year from a group led by Blackstone that includes Oprah Winfrey, Natalie Portman and former Starbucks chief Howard Schultz.

The new investors also included Jay-Z’s entertainment company Roc Nation, Orkila Capital and Rabobank’s Rabo Corporate Investments.

Speculation is they’re now targeting a $10b valuation. This is definitely a hefty valuation but I believe the market is there. A market cap in the $10 billion range would immediately make Oatly one of the most valuable pure-play stocks in the health food space, and there are reasons why investors may be willing to embrace a growth-dependent valuation.

This only adds to the fact of how hot the IPO market is. I’ve written about this before and we are seeing historic numbers as 2021 is well under way. I suspect Oatly will be one of the many mega IPOs that occur this year and we just got done witnessing a big one with Bumble.

Just for some additional context about the businesses, Oatly was founded in 1990 by Bjorn Oste. They’ve underwent 4 different funding rounds starting with their first venture round in 2016. They’ve come a long way in disrupting the industry and can be considered pioneers in the alternative dairy space with the partnerships they’ve curated and the annual sales they’ve accrued.

To me they’re following the money to the US where investors have poured cash into companies such as Beyond Meat and Impossible Foods, which have helped plant-based nourishment enter the mainstream thanks to high-profile deals to supply McDonald’s and Burger King, respectively, with vegan burgers. If you want to compare Oatly to Beyond Meat then you can look at their valuation. They’ve had a rocky ride as a listed company, and have a market value of $9bn, compared with $1.5bn when it listed almost two years ago.