Australian boutique brewer raises A$10.5 million in share offer

It looks rather unusal when a brewery collects millions of dollars for expanding its business to China without being widely distributed in the home market and without having a brewing facility on its own. This is true for Broo Ltd., an Australian brewing company founded in September 2009 by Kent Grogan and Kelly Davidson. The partners have launched so far only two beer brands (Broo Premium Lager in 2009 and Australia Draught Beer in 2014) which are distributed throughout Victoria and New South Wales. The beer is currently being produced at Icon Brewing in Sydney.

Broo initially offered 75 million shares at an issue price of 20 cents per share, which could have raised up to A$15 million (US$ 11.37m). After a six week initial public offering, Broo announced this week that it has raised only A$10.5 million (US$ 7.96m). Anyhow, it is enough for a listing on the Australian Securities Exchange (ASX).

A first attempt to go public in 2012 was refused by ASX because of the owner’s philosophy to remain 100% Australian owned as opposed to the major players in the Australian beer market. This was deemed by the ASX as „inappropriate". Still, the new share offer was again restricted to residents of Australia and by confirming that "you are not a ‘U.S. person’ (as defined in Regulation S under the United States Securities Act of 1933) nor are you acting for the account or benefit of a U.S. person”.

The ASX listing aims to fund the wider production, distribution and sale of the Broo beers in Australia as well as expansion into China. Kent Krogan has signed an agreement with Jinxing Beer Group for the production and packaging and with Henan Liquor for distribution via its distribution network and 260 retail outlets.

Broo recorded a loss of A$2.65 million (US$2.00m) for the year ended June 30, 2016 and declared retained losses of A$6.48 million (US$ 4.91m). Concerning the risks of an investment in the company, Broo’s prospectus says its business model is “relatively unproven” and an investment in the company is therefore of a speculative nature.

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