Swedish Brothers Ride Oat Milk Boom to $562 Million Fortune

(Bloomberg) -- It began with a group of scientists and a wild idea: That the byproduct remaining after making oat bran could be turned into non-dairy milk.

That idea became the foundation of Oatly Group AB, the Swedish oat milk company that debuted Thursday in New York after raising $1.4 billion in an initial public offering.

The share sale cements the fortunes of one of the scientists, Rickard Oste, and his brother Bjorn Oste, who co-founded the Malmo-based company. The American depositary shares climbed to $21.30 at 11:55 a.m. from the IPO price of $17, giving them a combined stake worth $562 million, according to the Bloomberg Billionaires Index. Oatly is now valued at about $12.5 billion.

“It's a 20-year-old overnight success story,” Bjorn, who remains an Oatly board member, said last year in an interview with William Hood & Co., a boutique investment bank.

‘A Lunatic'

Rickard, a professor of food chemistry, had for years focused some of his research on lactose intolerance and toyed with the idea of developing an oat-based milk substitute. By the mid-90s, he and a team at Sweden's Lund University had developed a prototype. Bjorn, an engineer by training, joined his older brother's venture in 1997 after selling a computer security company he'd built with friends from his high school and college days.

His friends were skeptical of his career change, he said in the interview: “They all wrote me off as a lunatic.”

In 2001, after the product had been released through various partnerships, the brothers launched Oatly as a separate brand. The company developed a small but devout following of consumers and grew slowly. It had less than 100 employees in 2015, according to a Lund University case study of the firm.

Chief Executive Officer Toni Petersson, who was hired in 2012, helped develop the company's cheeky branding and focus on environmental consciousness. Its products were first available in the U.S. in 2017 and can now be found in more than 20 countries.

Blackstone Stake

Oatly's largest shareholder -- a joint venture between Belgium-based investment firm Verlinvest SA and China Resources, a state-owned conglomerate -- will control roughly 48% of the company's shares after the offering is completed, the prospectus shows. Blackstone Group Inc. owns a stake of about 7%.

The company's success was anything but certain, but that didn't deter them, Bjorn said in the interview.

“It was a cool thing and we like challenges,” he said. “We have a saying, my brother and I: ‘If it's hard and difficult, that's good. Then we're going to do it.'”

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