As I started researching wine IPOs, I came across an interesting case: A Burgundy winery who attempted to raise 1.9 million GBP through a crowdfunding campaign and list publicly in the UK.
Domaine Chanzy, led by a former private equity dealmaker, has been seeking to access the capital markets for some time. The firm was offering wine discounts to those who funded the company via online crowdsourcing.
Ultimately the deal failed due to a lack of interest in the IPO and the inability to raise the full 1.9M GBP.
If you wish you could have grabbed some shares, fear not. Philippe der Megreditchian, Chanzy CEO, promises another try with a croudsourced IPO. He also says, "I believe, in time, that the crowdfunder will replace traditional investment banks. It’s Mr and Mrs Smith investing directly in the company."
This seems like an attempt to leverage the class of investors labeled as "hobby stock" investors in the Mondavi case. There are some investors who would invest in this company merely due to the business in which it operates, without regard for the underlying fundamentals associated with the business. And the 55% wine discount for owners would be a nice perk as well.
I think this is a really interesting case. It raises the question (which presents itself in various forms) of what kind of asset class wine falls into.
ReplyDeleteIn this instance, investors looking purely for returns are going to put little (if any) weight on the pleasure derived from investing in wine or big discounts they get as owners.
While this case is certainly a small offering, it does stand in contrast to being a public equity holder where you have essentially no influence and do not receive other benefits (like discounts). What are the implications for owner / operators if they are able to raise money at more attractive valuations given the joy people derive from investing in wine and also because of the other benefits (outside of dividends and capital gains) that investors value?
Does this limit incentives to be as profitable as possible because the investors are not as concerned about returns?
Also, while I think the crowd sourcing model is interesting, it is possible that wineries forgo some of the benefits of having investors with experience within the industry who can enhance the asset through providing feedback on operations and strategy.
Totally agree with Brent and Bill’s points about wine as an asset. This also makes me think of the companies that invest solely in wine, such as Bordeaux Traders and Wine Investment Fund. These companies buy wines the way that other companies buy stocks, expecting future gains; and as an investor you can either invest in the overall portfolio or in a particular vintage and buy specific bottles. (A group of friends and I actually bought several bottles of Bordeaux from our college graduation year and keep getting emails asking whether we want to sell or “redeem,” that is drink, our wine. It’s currently being held for us in a wine vault in London. We, of course, intend to drink it at our 25-year college reunion. But there are clearly people who are buying this Bordeaux with no intention of ever drinking it.)
ReplyDeleteWine isn’t like art or an expensive vacation house, or other assets that one might purchase with the intention of later selling but can at least enjoy in the meantime. As we pointed out in class the other day, wine can only be enjoyed once (at least without a Coravin). What would winemakers from a hundred years ago say, if they saw us buying wine as an investment?