«I hope you will respect that we are very private and I have answered as much as I can.»
We managed to convince a media shy investor to talk to us. This is Jesse Du Bey from Orkila Capital!
JDB: I hope you will respect that we are very private and I have answered as much as I can. I just don’t like to be in the news, as I prefer the attention be on the amazing beer. In this case, I am happy to answer what I can, given it seems to me your site is primarily about the beer.
Orkila Capital is a private equity company founded in 2013 and based out of New York. In June 2017 they announced their second fund, Orkila Growth Fund II, and with well over $100 million in the kitty they set out looking for brilliant investments. LERVIG is their third investment in this fund.
In May 2016, Orkila invested in Mikkeller, so Lervig is neither their first craft beer investment nor their first Scandinavian investment. Mikkeller was up until then wholly owned by Mikkel Bjergsø, and the brewery became the first European craft brewery that got PE backing. It has expanded its business a lot since Orkila came onboard. Anyway – back to Lervig.
Did you approach Lervig?
JDB: Yes, I did. We deeply love craft beer and think Lervig makes some of the best beers in the world. I met Anders and Mike a couple years back and we hit it off. I think Lervig’s beer is truly world class and I love the authenticity of the story and the brand.
JDB: The beer is awesome and the brand is authentic. It has real roots in a special place and is based on total product integrity. And I deeply believe in the management team and in Kristoffer and his group as partners.
You’re on the board of Mikkeller. Will you also be on the board of Lervig?
JDB: I am an Observer on both boards.
What will the NewCo be named?
JDB: Same as it is today, nothing changes at the company level. The shareholders formed a new entity to house our investment, but no business or trading happens in that entity and its only purpose is to hold our shares in Lervig.
Is NewCo dept free?
JDB: Our deal is 100 % equity and we employ no debt – so whatever the balance sheet was before, it will be the same except after closing Lervig will have additional investment funds for growth. We do not use debt as an investment strategy.
What can you tell those that are sceptic towards foreign investors given the history with Tou and Ringnes/Carlsberg? What are your plans for the company?
JDB: In my view, the issue with a new investor or owner isn’t primarily where they are from, but whether they:
a) respect and understand the cultural importance of a brand to its local market;
b) have end goals that align with maintaining the authenticity, spirit and quality of the brand and products; and
c) control the company (we do not). Our goal is to support the company in what they are already doing – making some of the world’s best, most premium beer.
But I understand that an American fund investing in a locally-treasured Norwegian brand could naturally cause questions and I am sensitive to that. Ultimately it is about the beer and about Lervig staying planted in Stavanger as a hometown brand, which of course it always will.
To the control point – Orkila technically owns 50 %, but we are essentially a minority investor from a governance perspective, as we do not control the company. We, Kristoffer and management agreed very early in our talks that Orkila has no interest in controlling anything – we are here to help from the background. Anders, Mike and the Lervig team are world-class and know what they are doing.
Can you reveal any of the key elements of the business plan, if a new business plan has been agreed?
JDB: C’mon we have to have some secrets.
Prior to the Mikkeller acquisition – did you have any in-house craft beer competence?
JDB: Just to be clear, we are a minority investor in Mikkeller and Mikkel controls his company. Prior to that investment we were a founding investor in the highest-end craft bourbon distillery in the US, called Kings County Distillery in Brooklyn. I think they make the best bourbon in the world. But nope, Mikkeller was our first craft beer investment.
What will you say your main contributions/influences have been as co-owners of Mikkeller? Can we expect same here?
JDB: I defer to Mikkel to talk about Mikkeller, just as I will defer to Anders and Mike to talk about Lervig. It is their show. What I will say about Mikkel is that he needs no help and is a true genius.
According to PitchBook this is your third Scandinavian investment. A third of your investments are in Scandinavia. How come?
JDB: We specialize in investing in premium brands and I think Scandinavia has a very evolved aesthetic sense and culture of free-thinking entrepreneurs – this comes through in some amazing companies and great management teams. We have been lucky to find a few of them.
What are your exit plans? What will Lervig be in 5-10 years and who might acquire it?
JDB: We can hold investments for 12 or more years and I don’t think about exit timing specifically. All our investors are patient family offices and I have never faced any pressure on exiting anything. So basically I have no idea and am going to just focus on helping the team build the business.