The shares of whisky and vodka distiller Top Shelf International Holdings Ltd (ASX: TSI) made their debut on the ASX today, after an initial public offering (IPO) pricing it at $2.21.
The Top Shelf share price slipped to $2.19 inside the opening few minutes of trading, and is now trading down further to $2.12 at the time of writing.
More about the Top Shelf IPO
Top Shelf is the brainchild of former Shelf CFO, Drew Fairchild, who’s also currently sitting on the board of ASX-listed workforce management software company Damstra Holdings Ltd (ASX: DTC).
The company distils its own brands, including the flagship Ned Whisky and also Grainshaker Vodka, from its state-of-the-art $20-million Campbellfield site in Melbourne.
Top Shelf has raised $47.2 million in the IPO at $2.21 a share – split between a $35 million primary issuance of new shares, and a $12.2 million selldown by existing shareholders. The pricing values the company at $90.5 million, which is 4.5 times the forecast revenue for FY21.
According to the prospectus, the company has yet to turn a profit – posting negative earnings before interest, tax, depreciation, and ammortisation (EBITDA) of $3.1 million in FY20, and negative $1.3 million in FY19.
Top Shelf says the fresh funds would be used to invest in sales and marketing, as well as funding the acquisition of the Eden Lassie agave farm. Agave is the main ingredient used in the distilling of tequila or mezcal, which it will launch next year.
Business update
As part of the float today, Top Shelf has also released an update saying that strong sales momentum has continued in November and for the key December quarter, with sales growth on track to achieve Top Shelf’s FY21 revenue forecast of $20 million.
The revenue forecast is mainly driven by the ongoing rollout of Ned Whisky across Australian retail stores, and the successful initial release of the Grainshaker Australian Vodka, both on-premise and online.
Top Shelf also said that 150,000 agave plants have now been planted at the Eden Lassie Agave Farm, with a further 100,000 plants in the nursery available for planting.
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Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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