BrewDog admits errors in crowdfunding promotion

BrewDog has been forced to admit errors in material sent to potential investors after the City watchdog intervened over the promotion of the Scottish brewer's record £25m crowdfunding pitch.

The company emailed shareholders to retract the claim that the "Equity for Punks" investment was "approved" by the UK Listing Authority, whose role is only to check that a company's prospectus conforms with the rules.

Investors were also told to "ignore the point made in our email about the past increase in value that investors in [Equity for Punks 2] made", since this claim had not been approved as part of the company's prospectus, according to the email from founder James Watt and his team sent on Monday.

Shareholders can withdraw their investments within two working days if they change their mind as a result of the new information, Mr Watt said.

The "update" followed an intervention by the Financial Conduct Authority after BrewDog launched its fundraising round last week.

Material sent out to promote the fundraising had not been approved by an FCA-authorised person and did not fully comply with financial promotions rules.

BrewDog, which is Scotland's biggest independent brewer, is seeking to raise £25m from the public over a year, with a minimum investment of £95. If successful, the exercise will break global crowdfunding records.

The eight-year-old Aberdeenshire company last year made operating profits of £3.9m. Known for its Punk IPA and general anti-establishment image, it was an early adopter of crowdfunding and most recently raised £4.25m in a 2013 appeal.

The company is unusual in that it offers its shares directly to investors rather than through a third-party platform. This means Equity for Punks is not regulated as a crowdfunding platform; unlike Crowdcube, Seedrs and other crowdfunding venues, it does not have to carry out appropriateness tests or check that investors understand the risks.

However, it still has to conform with rules such as those governing financial promotions and equity offers.

"Hey guys, this is an important email so please don't ignore or delete it . . . The really great legal team at RW Blears who helped us with the offer and the documents have informed us that we need to provide you all with a few legal updates," the email read.

The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

Mr Watt said: "We're happy that we're completely compliant now. As a public company we take our responsibility to investors very seriously."

He said that the fundraising was going "well" and had so far attracted about 60 per cent new investors and 40 per cent individuals who already held equity in BrewDog.

The fast-growing craft brewing industry - there are now more than 1,400 microbreweries in the UK - has increasingly turned to alternative finance over the past year, tapping into enthusiasm among drinkers for involvement in breweries' development.

However, there have been questions over the valuations attached to brewers' equity offerings, including the more than £280m at which BrewDog now values itself.

Camden Town Brewery recently raised £2.8m on Crowdcube, but slashed its valuation from £75m to £50m when it sold 20 per cent of the company to a separate group of investors.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation