Oatly’s US IPO prospectus highlights dangers to its Chinese language backer

Oatly, the Blackstone-backed vegan milk firm which on Monday filed to drift on Nasdaq, stated it could think about including an inventory in Hong Kong inside the subsequent two years, citing its relationship with a Chinese language state-owned conglomerate.

China Sources owns greater than 60 per cent of the Swedish group by a three way partnership with the Belgian household funding group Verlinvest and has helped the corporate to dramatically broaden its presence in China in recent times.

In a prospectus for its Nasdaq share providing, Oatly stated it may search a second itemizing in Hong Kong if its standing as a US public firm had a “materials antagonistic impact” on its main shareholders.

Explaining why it had agreed the availability, Oatly cited the likelihood that the US authorities may make it onerous for the group to share data with a state-owned firm and may forestall China Sources from putting its representatives on the Oatly board, and even pressure it to divest.

The corporate additionally stated it may pursue a Hong Kong itemizing if it generated greater than 25 per cent of its income from gross sales within the Asia-Pacific area for 2 consecutive fiscal quarters.

The prospectus detailed how Oatly has been capable of quickly broaden its presence exterior Europe, with Asia and the Americas contributing a mixed $150m, or 36 per cent of complete revenues, final yr in comparison with $50m, or 24 per cent, in 2019.

Oatly’s merchandise are actually bought at greater than 9,500 outlets in China, three years after launching within the nation. Within the US, Oatly merchandise might be discovered at 7,500 retailers and in additional than 10,000 espresso outlets.

The connection with China Sources attracted controversy when the group invested in Oatly with Verlinvest in 2016, prompting Swedish media to focus on China’s environmental and human rights file.

“It’s troublesome to have a big float with out Chinese language traders being concerned as of late,” stated one small Oatly shareholder from a enterprise capital agency.

Malmo-based Oatly has grown on the again of the recognition of plant-based milk options throughout the globe and is pushing for a $10bn valuation from the Nasdaq float, in line with folks conversant in its plans.

An funding spherical final yr led by Blackstone valued the oat milk maker at $2bn. Oatly’s different traders embody tv host Oprah Winfrey and rapper Jay-Z’s Roc Nation.

The prospectus confirmed earlier income estimates of greater than $400m in 2020 — $421m to be exact, up from $204m in 2019 — although losses widened from $35.6m to $60.4m.

Worldwide enlargement has centered on the specialty espresso market, with its “barista” milk which froths like cow’s milk. Oatly has additionally expanded into making and promoting plant-based ice cream and yoghurt, though its oat milk made up 90 per cent of income final yr.

The corporate stated it was planning to boost $100m in its preliminary public providing, a spot holder quantity that’s prone to change. Morgan Stanley, JPMorgan and Credit score Suisse are main the providing.

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