Thursday 20 May 2021 6:20 pm

Oprah-backed startup Oatly raises $1.4bn in stock market debut

Swedish vegan milk startup Oatly, which is backed by US talk show star Oprah Winfrey, has raised $1.4bn (£987m) in its initial public offering in New York.

The company, which is also backed by Natalie Portman, Jay Z and former Starbucks boss Howard Shultz, today said it priced 84.4m shares at $17 each — the top of its price range.

This gives the startup an implied valuation of roughly $10bn.

Malmo-based Oatly is known primarily for its oat milk but sells a range of dairy alternatives in 20 markets across Europe, the US and China. In the first quarter it booked 12-month revenue of $447m.

It has deals with coffee chains including Starbucks and also sells its products through supermarkets such as Tesco.

The company has cashed in on rising demand for plant-based products in recent years, particularly among younger consumers. In addition to the health benefits of oat milk, there are also concerns about the dairy industry’s contribution to carbon emissions.

“Investors swallowed what could be considered a frothy price tag, confident that the company will be able to capitalise on the growing demand for plant based products,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

But she warned: “As demand for alternative milk products heats up, Oatly may well find some of the cream is licked off its share price, unless it can keep rolling out fresh product lines to keep its growing customer base loyal.’’

Fellow vegan food brand Beyond Meat saw its shares skyrocket when it went public two years ago, while rival Impossible Foods has been tipped for a potential initial public offering.

Oatly, which was founded in the 1990s, raised $200m last year in an investment round led by Blackstone Group. Top stars including Winfrey and Portman also took part in the fundraising.

The company’s largest shareholder is a partnership between Verlinvest, the investment vehicle of the family behind AB Inbev, and state-owned China Resources Limited.

Morgan Stanley, JP Morgan and Credit Suisse are among the lead underwriters for the offering.