Investor's Brewdog Stake Faces Uncertain Future
Richard Fisher is an avid beer enthusiast who brews his own ale at home and once contemplated purchasing a brewery. However, he never anticipated the possibility of losing £12,000 through his investment in Brewdog.
The former small business adviser from Suffolk viewed acquiring a stake in the emerging beer company from northeast Scotland as an opportunity too promising to overlook.
"Maverick, independent, to a certain extent rebellious - it was all good stuff,"
Richard, aged 58, is among more than 200,000 investors who contributed to Brewdog's "Equity for Punks" scheme.
While most investors typically spent around £500 on shares priced between £20 and £30 each, Richard invested £12,000, attracted by the company's rapid growth and hopeful for a profitable return.
"I genuinely thought Brewdog would go public, be listed on the stock market with the freedom to buy and sell shares and there was potential to make a bit of profit."
Now, with reports that Brewdog is preparing for a potential sale, Richard has come to terms with the risk of losing his entire investment.
Origins and Growth of Brewdog
Brewdog was founded in 2007 by James Watt and Martin Dickie, who were in their early 20s and dissatisfied with the traditional UK beer market. They began brewing craft beer in an industrial unit in Fraserburgh, Aberdeenshire.
From its inception, Brewdog positioned itself as a radical alternative in the beer industry. Its "Equity for Punks" fundraising initiative, launched in 2009, was a distinctive approach to raising capital.
Essentially an in-house crowdfunding campaign, it offered beer enthusiasts the chance to "own a slice of the brewery and share in its success and growth."
Investors received benefits such as discounts on beer purchases, free birthday beer, and invitations to the "Annual General Mayhem" AGM, which featured live music and beer tastings.
Before closing to new investors in 2021, Equity for Punks reportedly raised £75 million, fueling Brewdog's rapid expansion into an international brand with four breweries and over 100 bars worldwide.
Investor Expectations and Institutional Financing
Richard noted that some investors contributed significant sums, hoping Brewdog would become a major success akin to Google or Tesla.
"Some people invested a lot of money, thinking it was going to be their Google or Tesla,"
However, many small investors may not have been fully aware that Brewdog was also seeking institutional financing, which impacted the value of their shares.
In 2017, the US equity firm TSG Consumer Partners acquired a 22% stake in Brewdog. Unlike the ordinary shareholders from Equity for Punks, TSG received "preference shares."
This arrangement means that if Brewdog is sold, TSG has priority to recoup its investment and any owed interest before other shareholders receive returns.
Investors like Richard fear that the company's valuation has declined significantly in recent years, potentially leaving little or nothing for ordinary shareholders.
Investor Experience and Share Liquidity
Richard purchased his shares approximately five to six years ago but was unaware of the details of the TSG deal until information surfaced on an online forum.
Brewdog previously held "trading days" allowing shareholders to buy or sell shares; however, the last such event occurred in 2022, with no further dates scheduled.
"My shares have effectively been worthless for the last two or three years,"
Not all Equity for Punks investors were motivated solely by financial gain. Some valued the community aspect and perks.
Chris Huish from South Wales bought £500 worth of shares and has benefited from a 15% discount on beer purchases both online and at Brewdog bars.
"I've had a lot of discount over the years but now not so much really."
As Brewdog's products became more widely available, Chris found he could often purchase the beer at his local supermarket for prices comparable to his discounted rate.
"I have no idea how much my shares are worth now,"
"There's not much transparency on that. I don't think I'm going to get it back."
Legal Considerations and Investor Sentiment
There is no suggestion that Brewdog has engaged in any illegal activity. Application forms for Equity for Punks advised investors to review the prospectus, which detailed risk factors and terms and conditions.
Gareth Fitzgerald, who invested £1,000, acknowledges the inherent risks in this type of investment as outlined in the small print.
However, he expresses disappointment with Brewdog's deal with TSG and its consequences for small investors, feeling disillusioned with a company that projected a progressive image.
"You know when you invest in shares their value can go up or down.
But that's probably where I fell foul because you assume there is going to be some proper resale value at some point for your shares.
We've basically just put money in to buoy up their business and there's no way we can now sell it."
Brewdog's Response and Current Status
Brewdog has been contacted regarding investors' concerns but has declined further comment.
In a statement posted on an online forum for Equity for Punks investors, current CEO James Taylor confirmed that business consultants Alix Partners are reviewing the company's "strategic options" and "investment opportunities."
He added:
"It remains business as usual across our bars, venues and breweries.
We remain fully committed to our customers, our crew, our partners - and to you, our Equity Punk community.
Your continued support is a fundamental part of Brewdog's journey, and we will keep you updated as the process progresses."
