Fever-Tree founders: 'We feel like we're just getting started'

Charles Rolls and Tim Warrillow say the upcoming IPO is exactly what they wanted.

by Rachel Savage

Fever-Tree is putting some fizz back into the IPO market with a £154.4m float on London’s AIM market, and unsurprisingly the posh mixer maker’s founders are pretty enthusiastic about it (and their upcoming payday).

‘It’s exactly the result we wanted,’ co-founder and executive deputy chairman Charles Rolls told MT. ‘It’s exciting to have a book very well covered despite the market conditions,’ fellow founder and chief exec Tim Warrillow added, referring to choppy stock markets that prompted companies including challenger bank Aldermore to pull planned flotations.

The float will raise a total of £93.3m, but only £3m is going back into the company after £1m in fees are paid out to advisers (including the sole bookerunner Investec). Private equity backer LDC, which bought in last March when Fever-Tree was valued at just £48m, is selling off just over 80% of its majority stake, leaving it with a 10.3% holding.

Rolls and Warrillow will net £17.3m and £7.6m respectively from selling off 40% each of their 28.7% and 12.7% stakes. Both are holding onto their roles in the company and said they’re in it for the ‘long-term’ - not entirely going back on their words from less than two months ago, when they told MT it was a ‘terrible tragedy so many UK businesses sell out so soon’.

‘We’ve really enjoyed private equity,’ Rolls said. ‘It gave us some money early on when we really needed it and they’ve been very supportive co-owners of the business. It was only on seeing the opportunity that Tim and I could still see out there that we thought we didn’t want to be in one of those auctions like we had 18 months ago when our last private equity owner sold.’

Rolls, the former boss of Plymouth Gin, and ex-marketing consultant Warrillow came up with the idea of creating a quality tonic water back in 2003. Fever-Tree was launched two years later after fundraising from angel investors and tracking down all-natural ingredients, including real quinine from the war-torn eastern Democratic Republic of Congo, where they still buy it (‘It’s a lawless place and it’s remarkable that this plantation prospers,’ Warrillow said.)

The company, which has since branched out into other similarly middle-class mixers such as ginger ale and elderflower tonic, posted revenues up 44% to £23.3m in 2013, while EBITDA ‘before additional items’ jumped 72% to £6.7m. It now sells to 50 countries, with 70% of revenues coming from abroad and almost a quarter from the hard-to-crack US.

It has been compared to a David going up against Goliaths like Schweppes, but Rolls said it was ‘still tiny compared to one of those great giants out there’. ‘When we started this, right around the world there weren’t any premium mixers,’ he said. ‘We started off not focussing on any competitor... We said, ‘What would we do if we were going to create the world’s best tonic water?’

‘The exciting thing is about the amount of growth that we see ahead of us,’ Warrillow said. ‘Even in our more mature markets like the UK we feel like we’re just getting started.’

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