Swedish oat drink company Oatly has announced plans to list on the US stock market.
The company says that it has submitted a confidential filing for an initial public offering (IPO) with the US Securities Exchange Commissions (SEC) and hopes to make its shares available to the public soon.
Here’s everything you need to know about Oatly’s upcoming floatation including whether and how you can buy the company’s shares.
What is Oatly?
Founded in the 1990s, Oatly is a Swedish brand that makes several oat-based drinks and products. These include plain oat milk, oat-based yoghurt, cheese and ice cream. Oatly products are currently available in more than 50,000 locations across 20 different countries including the UK.
The company has been riding high in recent times as the global demand for vegan-based protein alternatives soars.
As an example of the changing demand, Beyond Meat, a producer of plant-based meat substitutes, has seen a 500% share price surge since its IPO in 2019.
Researchers say that the vegan market could double in the next five years, and Oatly seems set to be a key player.
Just last year, the company conducted a funding round that raised $200 million (£144 million), drawing investment from US private equity group Blackstone and a couple of celebrity entrepreneurs including Oprah Winfrey and Jay Z. This deal shot up Oatly’s valuation to $2 billion (£1.4 billion).
How many shares will be floated?
Oatly has not revealed the exact number of shares it plans to float, but according to a report from Bloomberg, the company is seeking a value of US $10 billion.
The company plans to use the money to fund growth and possibly expand its product line and global presence.
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Can I buy shares in Oatly?
Yes. Even though Oatly will be listing in the US, non-US investors can still get in on the action.
Here in the UK, there will be an opportunity to buy the company’s shares the day they list or soon after. All you’ll need is a share dealing account from a reputable broker.
If it’s the first time you’ll be buying US shares, you’ll most likely be asked to complete a W-8 BEN form. This is a form that basically confirms you are not a US resident.
Completing the form could also save you up to 30% tax on any income from US shares (though tax treatment depends on your individual circumstances and may be subject to change in the future).
Your broker will provide the form and information on how to complete it.
How can I avoid foreign exchange costs?
Something else worth keeping in mind is that all US shares are bought and sold in US dollars. So if you don’t hold a foreign currency account with your broker, your pounds will have to be converted into US dollars first to be able to buy shares.
That means that you might lose several percentage points from your actual investment in the course of changing currency.
There is a way to avoid having to deal with these foreign exchange costs and tax issues, however.
Instead of buying Oatly’s shares directly, you could invest in a mutual fund or ETF that will be investing in the company’s shares. You might have to do a little research first to find these funds.
If you use funds, the actual proportion of your money invested in Oatly will likely be small. But you’ll still have the company’s stock as part of your portfolio. This means that you’ll be able to benefit from any success it might have in the future.
Should I buy Oatly shares?
Ultimately, the decision is yours. But as with any investment, don’t forget to do your research first before parting with your cash.
Bear in mind that though the demand and market for plant-based foods may be soaring at the moment, things could always change in the future. So, make sure all your eggs aren’t in one basket by diversifying your portfolio.
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