Beyond Meat Inc. raised $241 million in its initial public offering after pricing its shares at the top end of an elevated price range.
The maker of vegan chicken and beef substitutes sold 9.63 million shares for $25 each on Wednesday, after marketing them for $23 to $25, according to data compiled by Bloomberg. The listing values El Segundo, California-based Beyond Meat at about $1.5 billion based on the shares outstanding, according to a regulatory filing.
The company, backed by business and Hollywood celebrities including Microsoft Corp. co-founder Bill Gates and actor Leonardo DiCaprio, originally planned for a smaller share sale to raise only $184 million at the top of a $19 to $21 share price range.
One food industry consultant said investors are taking a lot on faith with money-losing Beyond Meat.
The company’s valuation in its IPO is “entirely reasonable if it’s got internationalizable potential and a great product, and has capacity to make money in its core profit structure,” said Robert Lawson, chief executive officer of London-based Food Strategy Associates. “But it’s not clear that Beyond Meat is that.”
The company will need to expand its product range to succeed outside the U.S., where burgers aren’t as popular, Lawson added.
Consumers are looking for more plant-based meat alternatives because of concerns about health, animal welfare and the environment. Startups like Beyond Meat are tapping into that demand by offering beef-like versions of the veggie burger and other meat products.
Supermarket sales of meat alternatives surged 19.2 percent to $878 million for the year ended Jan. 5, according to data from Nielsen. The field is crowded, though, with Silicon Valley-based Impossible Foods also placing its meatless burgers in thousands of restaurants, including, it was recently announced, all Burger King locations. Lightlife Foods, owned by Canadian meat giant Maple Leaf, is also rolling out a plant-based burger.
Beyond Meat is sold in grocery stores nationwide and is also increasingly being featured on restaurant menus, including TGI Fridays and Carl’s Jr. and now under a new deal with Del Taco Restaurants Inc. Its burger patties, with no cholesterol and 5 grams of saturated fat, are made of pea protein and beet juice, which makes them “bleed” when cooked. That compares with 80 milligrams of cholesterol and 9 grams of saturated fat for a 4-ounce patty of 80 percent lean beef.
The company’s 2018 loss shrank, while its revenue more than doubled for the second year in a row, according to its filings. Last year, it lost $29.9 million on revenue of $87.9 million compared with a 2017 loss of $30.4 million on revenue of $32.6 million.
Its investors include former McDonald’s Corp. Chief Executive Officer Don Thompson and venture capital firm Kleiner Perkins Caufield & Byers LLC, which owns 16 percent of the company, and Twitter Inc. co-founder Ev William’s Obvious Ventures with 9 percent, according to its filings.
Its backers had included Tyson Foods Inc., the largest U.S. meat producer. Tyson sold its 6.5 percent stake in Beyond Meat, according to a statement in April.
The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Credit Suisse Group AG. Beyond Meat is expected to begin trading Thursday on the Nasdaq Global Market under the symbol BYND.