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Oatly carton in dungarees
Image credit: Oatly

Oatly files for New York IPO, but sees China issues on horizon

April 21, 2021

Swedish alt-dairy firm Oatly has formally filed for its much anticipated IPO in the US. It plans to list on the NASDAQ under the symbol ‘OTLY’.

It tentatively expects to raise $100 million through the float at a reported $10 billion valuation, and will use the proceeds to fund working capital requirements, growth plans, and for general corporate purposes.

In the filing, Oatly reported FY 2020 revenue of $421.4 million, more than double the $204 million it made in FY 2019. However, FY 2020 losses widened to $60.4 million from $35.6 million a year earlier.

Oatly said it could seek a further listing in Hong Kong within the next two years if its US public company status had a “material adverse effect” on its shareholders, or if it generated more than 25% of its revenue from the Asia-Pacific region for two consecutive fiscal quarters.

Earlier this month, the Swedish company announced its first production facility in Asia in partnership with Singaporean beverage maker Yeo’s. The S$30 million ($22.3 million) factory will initially produce 60 million liters of oat-based milk per year, primarily for the Chinese market.

Oatly’s plant-based milk is sold in around 9,500 stores across China. It has also partnered with Starbucks in the country, with the coffee chain using its products for various food and drink preparations.

But with its Hong Kong ‘Plan B,’ Oatly appears to be anticipating potential problems amid deepening tensions between China and the US. China Resources, a state-owned conglomerate co-founded in the 1930s by Chinese Communist Party grandees Zhou Enlai and Chen Yun, owns around 30% of the Malmö-based company.

China Resources invested in Oatly back in 2016 through a joint venture with Belgian firm Verlinvest. The duo will continue to appoint six directors to the Swedish company’s 14-person board should their combined stake remain higher than 30% following the proposed IPO, Reuters reports .

As China and the US face off over myriad issues – from Hong Kong, Taiwan, and Xinjiang to Covid-19 and intellectual property disputes – the specter of government intervention may be raised.

Chinese companies doing business in the US have regularly faced scrutiny from that country’s authorities over national security concerns. Earlier this year, the US Securities & Exchange Commission implemented the Holding Foreign Companies Accountable Act, which calls for select foreign companies which trade their shares in the US to be audited by regulators and potentially de-listed.

In its most recent private funding round last July, Oatly raised $200 million from Blackstone, Rabobank, and a host of celebrity investors including Oprah Winfrey, Jay-Z, and Natalie Portman, among others.

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