Burgundy wine producer Domaine Chanzy has pulled its plans to launch the first ever crowdfunded float on the London Stock Exchange after failing to hit its fundraising target.
The luxury wine company had aimed to raise £1.9m on the Seedrs website as part of an initial public offering on London’s junior AIM exchange to price shares at 120p each.
However, the company only managed to bring in just more than £1m – or 53% of its target – during its two-month Seedrs campaign and also failed to attract sufficient take-up for a placing through its broker WH Ireland.
Domaine Chanzy, owned by Paris-based private equity firm OLMA, said the pulling of its IPO was a postponement not a cancellation as it was in advanced discussions to acquire another “significant” French wine producer.
The acquisition, which is expected to be equity financed, would broaden the business’ range of wines and distribution capabilities, increase its operating leverage and reduce its financial gearing, it said in a note to investors sent on Friday.
“In light of this significant change to its business, the company is therefore obliged to postpone its proposed introduction to trading on AIM and therefore suspend the current campaign being undertaken on our behalf by Seedrs,” the company said.
Chanzy had hoped to attract a wider range of investors by launching its IPO through crowdfunding and making the flotation process easier, with a minimum investment of £10.
The IPO would have given the business a market capitalisation of about £10m and it planned to use the money raised to bolster working capital, develop its distribution network and launch a new wine brand.
Seedrs co-founder Jeff Lynn added: “We’re always sorry to see campaigns fail to hit their targets, but that’s the nature of crowdfunding.
“We operate on an all-or-nothing basis, and it’s for the crowds to decide what they want to invest in. We very consciously do not restrict Seedrs solely to businesses we expect to fund; instead, we try to put a wide variety of businesses up there and let investors choose from among them. In this case not enough investors chose to invest, so it won’t receive its funding.
“We’re very proud to bring the bookbuilding process out of the shadows and into the public domain, and doing so means that everyone can watch both when a campaign succeeds and when it fails.”
Philippe der Megreditchian, Chanzy CEO and managing partner of OLMA, said: “We were pleased with the encouraging level of support that we received from individual investors that were introduced via our partners at Seedrs, who were coordinating the crowdfunding element of our IPO.
“We plan to capitalise on this interest by presenting a larger, more diverse business, once we complete this proposed acquisition.”
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