Sustainable tissue challenger Cheeky Panda has put its ambitions for a blockbuster flotation on hold amid economic turmoil and a dramatic global slowdown in IPO activity.
The rapidly growing business had previously been very vocal about its plans for an IPO after hiring KPMG to run a dual-track process last year.
Cheeky Panda – founded by Chris Forbes and Julie Chen in 2016 – hoped to either float on the London Stock Exchange’s junior AIM market this year or raise money in a private placing followed by a much bigger IPO on the main exchange in 2023 or 2024, with the move expected to value the brand at anywhere from £150m to £600m.
However, the war in Ukraine launched by Russia in February has since led to wide-scale disruption in debt markets and supply chains, spiralling energy and commodity costs and runaway inflation across Europe.
A corresponding decline in public company valuations, amid a wider market sell-off, and poor post-float share price performance saw a dramatic slowdown in IPO momentum, with the number of global deals plummeting by 46% year on year in the first half of 2022 and the amount raised dropping 58% to $95.4bn, according to the latest figures from EY.
Forbes told The Grocer that an IPO was still “an attractive long-term plan” but the market sell-off this year had changed Cheeky Panda’s outlook and timelines for a public listing.
“We are taking on additional capital right now in the form of a private placement, but public market trading of the company will be a few years away when markets recover,” he said.
“The current plan is to bed in the current senior management team, expand sales with existing and new clients over the next three years and to build the company to £50m turnover with a net positive free cashflow.”
Cheeky Panda is looking to raise £5m in the new private round to continue its expansion plans.
It comes as the business, which makes toilet paper, kitchen roll, tissues and baby wipes from bamboo, revealed its latest executive appointment, with Tom Mitchell, formerly head of finance at fashion e-commerce business Threads Styling, taking on the role of CFO.
It is the latest move by Cheeky Panda to strengthen the management team in recent months following the addition of David Carter, formerly of The Body Shop and Burberry, as COO and Bulldog Skincare founder Simon Duffy joining the board as a non-executive director alongside serial fmcg entrepreneur Giles Brook and former BrewDog global marketing director Sophie More, who were recruited last year.
“We’ve built this business from our back bedroom to an eight-figure turnover in just six years,” Forbes added.
“In a world of stretched resources we’ve been driven by the passion to make an impact.
“The growth opportunity for Cheeky Panda is phenomenal. The UK tissue market is £2bn a year and our global addressable market is over £100bn. However, it’s important not to rush things. We’ve developed a sophisticated cloud-based IT architecture and supply chain that can scale with our ambitions, without loading on a big back office costs.”
He added that brand was working on NPD and had lined up new retail listings.
Cheeky Panda has so far raised almost £10m over four crowdfunding rounds from 5,000 investors, with the business valued at more than £80m.
It has sold in excess of 50 million products in more than 25 markets across Europe, the US, China and the Middle East, with sales forecast to hit £14m this year.
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