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BrewDog agrees tie-up with Japan’s Asahi to boost sales



Food & Beverage updates

BrewDog has established its first international joint venture with Japan’s Asahi as the UK’s largest craft brewer seeks to increase sales ahead of a planned London IPO.

The Scottish group aims to boost sales in Japan sixfold in five years after agreeing the deal with Japan’s largest brewer.

The partnership will market and distribute BrewDog beers such as Punk IPA, Hazy Jane and Elvis Juice, using Asahi’s distribution capability to push up supermarket sales. It could later establish a brewery in Japan, said James Watt, co-founder and chief executive. BrewDog already owns a bar in Tokyo.

The deal comes as BrewDog meets with bankers about a likely London listing, having appointed Rothschild as independent adviser to the IPO process.

“We see [the IPO] as a key part of our future,” Watt said. The joint venture “is a new type of initiative for us . . . If this is successful in Japan there might be similar type agreements with other partners in other geographies.”

Ahead of the pandemic, BrewDog had been looking to list in 2020. It has not committed to a revised timeline for the IPO, but is close to appointing lawyers, Watt said.

It aims to list in London but is also considering New York; a sale, rather than an IPO, is not on the cards, he added. BrewDog lists independence, in an industry dominated by big drinks multinationals, as one of its company “beliefs”.

The craft brewer, which will own 51 per cent of the venture, is seeking to take a greater share of the Japanese beer market, which was worth $28bn in 2020, according to Euromonitor. The venture will be led by chief operating officer, Daisaku Okuda, an almost 20-year veteran of Asahi Japan.

As it expands internationally, BrewDog has also established a franchise agreement with Ace-Aloha Group in India, which will open up to 50 BrewDog venues there.

BrewDog, which was valued at almost £2bn in its latest crowdfunding round, reported net revenues of £182m in 2020, up 4.2 per cent from a year earlier, but swung to a £13.1m pre-tax loss. As well as brewing, it has opened 99 bars and four hotels globally.

BrewDog’s beer sales were set to rise 25 per cent this year, Watt said. “Given all the challenges of last year, this year would be a result we are very happy with,” he added.

Founded in 2007, BrewDog has been the most high-profile group to emerge from the UK’s craft beer boom, raising more than £94m via crowdfunding. It drew attention in its earlier years through publicity stunts such as dropping taxidermy “fat cats” from a helicopter over London.

As well as the upheaval of the pandemic, the company faced criticism this year after a group of former staff accused it of having a misogynistic work culture, a “toxic” attitude to junior employees, and pursuing “growth at all costs”.

Watt said the criticism was “something we’re taking extremely seriously”. BrewDog has appointed culture advisers Wiser to carry out an independent review, is pushing up salaries, and has set up an ethics hotline as part of a series of changes.

BrewDog also appointed Blythe Jack, managing director at private equity firm TSG Consumer Partners — which bought a 22 per cent stake in 2017 — as its first chair following the claims. More governance changes would be unveiled ahead of the listing, said Watt.

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Abu Dhabi’s Adnoc plans 7.5% stake float of oil drilling unit




Abu Dhabi National Oil Co updates

The Abu Dhabi National Oil Company plans to list a 7.5 per cent stake in its drilling unit via an initial public offering on the Gulf emirate’s stock exchange next month.

Adnoc Drilling is 95 per cent owned by Adnoc, which has in recent years embarked on a modernisation drive including diversifying its investor base and unlocking cash from its infrastructure base.

In 2018, when Baker Hughes acquired a 5 per cent stake in the business, Adnoc Drilling had an equity value of $10bn.

“Adnoc Drilling’s planned value creation opportunities, including a major rig fleet expansion and well drilling program, ideally position the company to take full advantage of emerging opportunities,” said Sultan Al Jaber, Adnoc’s chief executive.

The offering, which is open to domestic and international investors, is expected to take place in October on the Abu Dhabi Securities Exchange (ADX) subject to market conditions and regulatory approvals. The size of the offering could be increased.

The United Arab Emirates, which is already the third-largest producer in Opec, is committed to raising its output capacity from 4m barrels a day to 5m barrels a day.

The Gulf state earlier this year clashed with its larger neighbour, Opec kingpin Saudi Arabia, by refusing to endorse a planned Opec+ production increase. Abu Dhabi argued that its “baseline”, the level from which Opec quotas are calculated, should be increased. A compromise deal was clinched in July that raised the UAE’s baseline quota from 3.2m barrels a day to 3.5m barrels a day.

Adnoc Drilling, the largest drilling company in the Middle East by fleet size, is the sole provider of drilling services to Adnoc. In 2020, Adnoc Drilling’s revenues were $2.1bn, with a profit of $569m.

The deal would be the second IPO launched by Adnoc since the 2017 listing of its distribution arm, the largest operator of petrol stations and convenience stores in the UAE.

The national oil company has separately opened its refineries and oil and gas pipelines businesses to international investors. It is also seeking to sell stakes in its power plants and other infrastructure.

Adnoc earlier this year started trading futures of its flagship crude oil, Murban, on ICE Futures Abu Dhabi, a commodities exchange based in the capital’s financial district.

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Chemicals distributor Azelis seeks to raise €880m in Brussels IPO




IPOs updates

Speciality chemicals distributor Azelis is seeking to raise €880m in an initial public offering in Brussels in what will be one of the sector’s largest listings this year.

The Antwerp-based company, which is owned by Swedish buyout firm EQT, is targeting a valuation of more than €5bn, according to people familiar with the matter.

The IPO would make Azelis the world’s fourth-largest listed chemicals distributor in a highly fragmented €117bn market. As well as using the IPO’s proceeds to cut some of its €1.6bn of debt, the company also plans to make further acquisitions.

“As a public company, we believe we will be able to fully capitalise on growth opportunities, continuing to complement our strong organic growth with accretive acquisitions,” said chief executive Hans Joachim Müller.

Müller said he hoped to expand operations in Asia and gain a foothold in Latin America, where Azelis does not have a presence.

Founded in 2001 from the merger of French and Italian distributors, Azelis’s business extends beyond distribution. It also has a network of laboratories that test products and add new ingredients to existing products for clients.

The company expects tougher regulations in markets from animal nutrition to cosmetics to push more chemical producers to outsource distribution and formulation services to larger external providers.

Azelis laboratory
In addition to distribution, Azelis also has laboratories that test products and add new ingredients to existing products for clients © Ben Connell

Azelis generated revenues of €2.2bn last year, while its operating profit climbed 10 per cent from 2019. It employs 2,800 people across 56 countries.

Demand for chemicals has rebounded rapidly from the pandemic’s initial hit, sending valuations for the sector soaring and handing EQT a chance to capitalise.

Nouryon, the former chemicals arm of Akzo Nobel that was acquired by US buyout firm Carlyle in 2018 in a €10bn deal, is also set to go public.

Although Azelis has only a 2 per cent market share, it is enough to make it one of the sector’s largest players alongside Germany’s Brenntag, IMCD from the Netherlands and Illinois-based Univar Solutions. In a sign of investor appetite for the sector, Brenntag’s share price is at an all-time high.

Müller said that because the company’s global service centre was in Belgium, Brussels was the best place to list. It would be the largest IPO on the Brussels Stock Exchange since 2007.

EQT will retain a stake in the company following the IPO, which Azelis had considered before the Swedish private equity firm led a buyout of the business in 2018.

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Petershill/Goldman Sachs: private capital seeks paradoxical public market boost




Goldman Sachs Group updates

Groucho Marx was suspicious of any “exclusive” club whose standards were so low he could join it. The UK’s dyspeptic long funds may have similar reservations about Petershill Partners. This offshoot of Goldman Sachs buys stakes in private equity groups and hedge fund managers. The investment bank plans to float Petershill, which may be worth about $5bn, in London. Anyone with a broking account will be able to buy shares previously only available to select Goldman clients.

The Wall Street bank will remain a gatekeeper in another respect by investing the capital of Petershill Partners in return for fees. These look generous, even though a minimum 7.5 per cent annual charge would be levied on income from investee companies, rather than on fund value.

Goldman, which is diversifying into asset management, will have earned its money if it uses its powerful network to make lucrative investments.

If you think that will happen, Petershill will be a worthwhile investment itself. If not, shrug and pass on. A stock market is a place to test business propositions. It is not a corporate Hall of Fame, though that is how London sometimes self-defeatingly seems to see itself.

Petershill invests in asset managers rather than their products. This spares end investors two tiers of management fees. Typically, it purchases minority stakes in private capital managers when they issue equity to finance expansion.

Private capital is hot at the moment. You might therefore ask why Petershill is seeking a mooted $750m from unfashionable public investors rather than that source.

The reason is that alternative asset managers from Apollo to Pershing Square prize permanent capital, which they can deploy for the long term. The stock market is a good supplier. You might also see adroit timing in Petershill’s plan to float when private capital management is, in the words of one buyout boss: “The hottest of hot spaces at the peakiest of market peaks”.

However, the mooted price of about $5bn would equate to only around 22 times estimated net income in the 12 months to June. That is a lot lower than US peer Blue Owl and quoted UK buyout group Bridgepoint, which are trading at more than 30 times forward earnings.

Routinely presented as polarities, private and public market capital remain inextricably entwined, as this deal would prove.

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