BREWDOG has changed tack on its fund-raising course by offering a high-interest paying bond to investors.
The craft brewer is offering investors a return of 6.5 per cent per year on the BrewDog Bond, available from today, on investments starting at £500.
The bond, offered through the Crowdcube platform, comes with BrewDog having reached less than one third of the £25 million target from its latest crowdfunding campaign.
BrewDog confirmed yesterday that it has raised nearly £8m from its fourth Equity for Punks campaign, having attracted around £5m within three weeks of its launch in April.
Investors have until April next year to participate in this funding round.
The partnership with Crowdcube means investors can buy bonds or equity through the crowdfunding platform.
Asked if the bond issue reflected a change of strategy from its original aim of raising £25m though Equity for Punks, co-founder James Watt said: “Yes, I think so. For us it is very much about expanding our universe.
"We now have got over 30,000 Equity for Punk investors and we love building a culture and community around what we do.
“Crowdcube are the best crowdfunding platform in the UK, so we felt a partnership with them would let us take BrewDog, our beers and our Equity Punk share offering to a much bigger audience to grow our business better and faster and stronger.
“We are also really excited to be the first company to ever do a joint crowdfunding bond and equity raise and they are complete specialist bonds. It was exciting to put the whole thing together.”
Mr Watt said the Crowdcube platform gives BrewDog access to a base of nearly 200,000 registered users and investors. He said the profile of such investors is likely to differ from that of its “punk” crowd-funded backers, stating: “The bond element is very different to equity, so it will attract a different type of investor, someone that’s looking for more of a fixed short-term return than a long-term equity play.”
Asked why BrewDog is able to offer such a high rate of interest on the bond when savings rates from high street banks remain low, he said: “We wanted to make it attractive and we worked with bond rating agencies and Crowdcube to determine what they thought would be the optimal rate to offer people investing in the platform, based on their experience of the sector. We decided that was where were best to position the offer of the bonds.
BrewDog said the capital raised by the bond will contribute to the crowdfunding target set in April.
Investors have 45 days to invest in a bond or equity on the Crowdcube platform. The capital will be returned to investors when the four-year bond matures, while in the meantime subscribers will be offered a “top tier” discount in BrewDog bars and its online shop.
BrewDog said the funds raised will be used to continue the roll-out of its international bar network. It now has 32 bars, having opened in Brighton and Stockholm last week, and has a further 12 at various stages of development. These include a bar in Glasgow’s Merchant City, which will incorporate a bottle shop.
The bars in the BrewDog estate are largely leased, as opposed to the properties being owned outright.
Funding raised through Equity for Punks and the bond will also contribute to the development of a craft distillery and sour beer facility and a hotel near its brewery in Ellon, Aberdeenshire. BrewDog has plans to invest in environmental technology at its north-east base.
BrewDog meanwhile is planning to build a brewery in Columbus Ohio, and will launch a separate crowdfunding campaign to fund the development. Mr Watt said the scheme was currently being out in place, with the company yet to decide a fund-raising target.
BrewDog said it is move to combine equity and bonds in its fund raising strategy is unprecedented. But it is not the first Scottish beer company to offer bonds.
Edinburgh-based Innis & Gunn launched a four-year mini-bond in April, offering a gross annual interest rate in 7.25 per cent. Its minimum investment was also set at £500.
Innis & Gunn hopes to raise £3m from the investment offer to build its first brewery.
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