Oatly IPO raises $1.4bn as oat milk tolerance increases worldwide

Oslo — It began with a group of scientists and a wild idea: that the byproduct remaining after making oat bran could be turned into non-dairy milk.

That idea became the foundation of Oatly Group, the Swedish oat milk company that debuts in New York on Thursday after raising $1.4bn in an initial public offering (IPO).

The share sale cements the fortunes of one of the scientists, Rickard Öste, and his brother Björn, who co-founded the Malmø-based company. Their combined stake was worth $448m after the shares priced at $17, according to the Bloomberg billionaires index. Oatly is now valued at about $10bn.

“It’s a 20-year-old overnight success story,” Björn, who remains an Oatly board member, said last year in an interview with William Hood, a boutique investment bank.

‘A lunatic’

Rickard, a professor of food chemistry, had focused some of his research on lactose intolerance for years and toyed with the idea of developing an oat-based milk substitute. By the mid-1990s, he and a team at Sweden’s Lund University had developed a prototype. Björn, an engineer by training, joined his older brother’s venture in 1997 after selling a computer security company he’d built with friends from his high school and college days.

His friends were sceptical of his career change, he said in the interview: “They all wrote me off as a lunatic.”

In 2001, after the product had been released through various partnerships, the brothers launched Oatly as a separate brand. The company developed a small but devout following of consumers and grew slowly. It had less than 100 employees in 2015, according to a Lund University case study of the firm.

CEO Toni Petersson, who was hired in 2012, helped develop the company’s cheeky branding and focus on environmental consciousness. Its products were first available in the US in 2017 and can now be found in more than 20 countries.

Blackstone stake

Oatly’s largest shareholder — a joint venture between Belgium-based investment firm Verlinvest and China Resources, a state-owned conglomerate — will control roughly 48% of the company’s shares after the offering is completed, the prospectus shows. Blackstone Group owns a stake of about 7%.

The company’s success was anything but certain, but that didn’t deter them, Björn said in the interview.

“It was a cool thing and we like challenges,” he said. “We have a saying, my brother and I: ‘If it’s hard and difficult, that’s good. Then we’re going to do it’.”

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