Dorset Distilling Co. Ltd

Gold Due Diligence for GrowthInvest – EIS Report

06 Feb 2018 / Tax enhanced research

Summary: Dorset County Distilling is raising new money to fund the development of a brand-new distillery in Dorset.

Why Invest

Positives

Strategy: The company plans to distil and market premium whisky and other spirits from new and converted farm buildings in Dorset.

Issues

Competition: There are already a number of “craft” distilleries dotted around the UK. The trend is well established, but it is still an emerging market.

 

The Management

Positives

Team: It is initially a family enterprise: the father has a substantial track record in managing businesses, mainly in shipping; the son has experience in brewing.

Issues

Track Record: The management team has no previous experience in running a distillery or marketing craft spirits, but it has researched the market extensively for the past four years.

 

Nuts & Bolts

  • Share Issue: Initial open offer issue for 25,000 shares (33% of enlarged equity) at £110 per share i.e. raising £2.75m gross, and looking to raise £4.5m in total in due course.
  • Offer: Offer launched on 20th December 2017 and will close on 30 June 2018.
  • Exit Strategy: No planned exit but the most likely first liquidity event will be a trade sale of either brands or a stake in the whole company.

 

Specific Issues

  • Start Up: Dorset County Distilling is a pre-revenue proposition. Currently, there are only buildings that need to be converted, but management has the relevant planning permissions and a well researched business plan. There are some low-level construction risks to be tackled before the first spirits are produced and sold.

 

Risks

  • Generic: Dorset County Distilling is a small unquoted company. There will be no formal market in the shares. It is not intended that there will be any capital returns or dividends paid in the first five years. There can be no guarantee that the investment will be successful, that an exit will be achieved or that there will be any value to be distributed.
  • Specific: The building project is not complex, and project managers have been hired. Once the distillery is operational, the company has to make flavoursome products and be successful in its sales efforts, in many cases to enterprises much larger than itself and against stiff competition. None of these obstacles is insurmountable; the market for UK whisky, craft gin and other spirits is growing robustly, and is forecast to continue to do so for some years to come.