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Chapel Down on the acquisition trail as it raises £18.5m investment in new shares

By Chris Price

Wine and beer maker Chapel Down is putting itself in position to make takeovers after raising £18.5 million from new investors.

The company, which is the largest wine producer in England, secured the cash by offering 37 million new shares at 50p each in a “transformational moment” for the growing business.

It attracted a global institutional investor and IPGL, the family office of Michael Spencer, the founder and chief executive of NEX Group, the UK trading and technology company.

Chapel Down is stocked in Marks & Spencer, Waitrose, Sainsbury, Tesco and Majestic
Chapel Down is stocked in Marks & Spencer, Waitrose, Sainsbury, Tesco and Majestic

The Tenterden-headquartered firm, which has just launched a gin and vodka, also plans to raise another £1.5 million in a further share offering to its existing shareholders.

Bosses said the investment will put the company in the best position “to take advantage of acquisition and consolidation opportunities that may arise”.

It is the latest step in a long-term plan for chief executive Frazer Thompson, who first spoke of an expected consolidation in the market in an interview with Kent Business in 2014, then promoting a £4 million crowdfunding campaign.

Back then, he said: “We are going to play a role in the consolidation of that industry and will be best placed to do it.

Chapel Down chief executive Frazer Thompson
Chapel Down chief executive Frazer Thompson

“People want our brand. We are making ourselves healthier for that by being a lowest-cost producer and have scale advantages which we want to use to make a bigger wine industry for Kent.”

The money from the latest share offering will be used to buy 500 acres of new vineyard land and to build new stock.

It already grows vines in Tenterden, near Blue Bell Hill and in the Weald.

It will also invest in sales and marketing and fit out its new Ashford brewery, due to open next year.

In a trading update, Chapel Down said turnover is expected to be about £11.6 million in this financial year.

The planned Chapel Down brewery
The planned Chapel Down brewery
The Chapel Down vineyard at Blue Bell Hill
The Chapel Down vineyard at Blue Bell Hill

Whilst the focus will be on rapid beer growth next year, the delivery of the brewery at the end of 2018 is expected to increase underlying earnings from 2019.

Mr Thompson said: “This is a transformational moment for Chapel Down.

“This fundraising enables us to significantly invest in the business for further growth and to meet the increasing demand for our products.

“We welcome the new investors in our company and hope that many of our existing shareholders will take part in the open offer and continue their journey with Chapel Down.

“This marks the opening of a new chapter of growth for Chapel Down.

“With an outstanding team and world class products, we will look to fully capitalise on our position as the UK’s most exciting drinks company.”

Tunbridge Wells-based law firm Cripps advised on the legal aspects of the fundraising.

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