Private equity money injection for brewer Innis & Gunn

Is accepting private equity funds the accolade for craft brewers? It may seem this way. Because, by taking in a GBP 15 million (USD 19.6 million) investment by the US private equity firm L Catterton in exchange for a 28 percent stake, disclosed in September 2017, Scottish brewer Innis & Gunn has proven the doubters wrong that its wonky finances could bring the company down.

Trust the private equity people to have gone through Innis & Gunn’s books with a magnifying glass. Otherwise, why should they shell out all that money to help the craft brewer accelerate its international growth, intended to double turnover between 2015 and 2018? Innis & Gunn was founded by Dougal Sharp in 2003. Mr Sharp remains the brewer’s largest shareholder.

The new investment values the brewer at GBP 58 million (USD 76 million) after it reported revenue growth of 22 percent to GBP 14.3 million in 2016, with pre-tax earnings hitting GBP 331,000 – completely reversing the GBP 275,000 loss in 2015.

What must have saved Innis & Gunn, a brewer best known for its barrel-aged beers, were two successful rounds of crowdfunding. It used the GBP three million it raised from 1,105 investors via a retail bond in 2015 to buy the Inveralmond brewery in Perth, Scotland, last year after shelving plans to build its own brewery. Previously it had its beer contract-brewed.

Last November, it raised GBP 2.4 million in capital from crowdfunding, leaving it with 2,000 investors.

The company reportedly sold 2.2 million cases of beer (188,000 hl), with over a fifth going to Canada, its biggest export market.

Scottish craft brewer BrewDog did a similar deal, worth GBP 213 million (USD 278 million), in May this year with a San Francisco private equity firm, giving it a 22 percent stake in the Ellon-based company. This valued BrewDog at GBP one billion.