January 27, 2023


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Acquisition Fund together to invest $1 billion in Oda - E24

Acquisition Fund together to invest $1 billion in Oda – E24

Existing and new investors unite in Oda’s largest ever fundraiser. The grocery competitor is valued at NOK 3.5 billion – down by NOK 6.5 billion from last year.

Fully Funded: No more money should be required to become profitable with the current plan, according to Oda founder Carl Munthe-Kass. From right: Kristin Thornes Woldesdal CEO of Oda Norway, Staffan Morndal at Verdane, CFO at Oda Vegard Aakre Vik, Martin Golme at Summa Equity, and CEO of Oda Karl Munthe-Kaas.

Norwegian buyout funds Summa Equity and Verdane, together with Sweden’s Kinnevik, are investing a total of NOK 1.5 billion in new capital in Oda.

That’s the financing CEO Karl Munthe-Kaas said they were in the final stages of last month, when at the same time he announced big job cuts in the division that works with international growth.

– Fundraising this year has been more urgent than it was last year, there is no doubt about that, says Mintah-Kas.

Last year, when borrowing money was still very cheap, Oda’s founder talked about rolling out home delivery in Europe at a rapid pace.

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This year, expansion plans have been significantly scaled back. Oda will initially settle into launch in Finland from earlier this year and then gradually launch in Germany at the start of 2023.

But Oda’s management can still come to the table with growth.

– In recent months, we have achieved a growth of 15-20 percent compared to the same period last year. And then there was the closure. “We see that our loyal customer base has continued to grow, and adjusting to become a low-cost player has given us an extra boost,” says Christine Thornes Woldesdal, CEO, Norwegian.

6.5 billion in consumption

This is the company’s largest ever capital increase, says Mintah-Kas.

Oda carried out a larger investment round last year – at NOK 2.2 billion – but this also included large share sales from the current owners.

In a smaller deal in the aftermath, Oda was valued at more than NOK 10 billion. One year later, the capital market is not willing to look for the same for ownership in growing firms.

Prerequisites: Verdane and Summa Equity expect a positive operating result from operations in Norway next year, as Oda did last year.

Verdane, Summa Equity and Kinnevik now own just over half of the company, says Staffan Morndal on the former investment team.

Since Kinnevik previously held an ownership stake of about 20 percent, this gives Oda a valuation of around NOK 3.5 billion.

– There was never any doubt that we would be able to raise the money, but there was a process to find the right price. What was the right price last year is not the right price this year, says Mintah-Kas.

– But now we found the price. So it’s just a matter of taking the capital and continuing to build.

Norwegian profitability required

According to Munthe-Kaas, Oda’s mini-plans are linked to capital market requirements to be able to prove profitability early on.

The Norwegian operation, excluding international expansion expenses, had a positive result of NOK 29 million last year. It probably won’t happen again this year — Norwegian boss Thornes Woldesdal points to the year-round effects of the price adjustment and the fact they’ve opened a new warehouse in Leer — but by next year, profitable operations are again the aspiration.

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It is important for new investors.

– We also feel very confident that they will achieve this, otherwise we would not have made this investment. It’s not necessarily the entire group that’s profitable, but the Norwegian operation is, Morndal says in Verdun.

IN, OUT AND IN: Verdane previously had a stake in Oda, but it sold at a nice profit. Staffan Morndal says the buyout fund is now ready with a horizon of five to 10 years.

– Would you prefer Oda to grow by leaps and bounds or more moderately?

– We have invested with a clear plan so that what we start with reaches profitability. That means we’re asking Oda not to burn too much capital, but to grow as fast as possible under that plan.

– Do you think it’s right that Oda, which delivers goods directly to your home, is a low-cost company?

– I think it’s very good for Oda to do that, because then you get customers who might not have come otherwise. But I don’t think it’s necessary to have a fairly fast-growing and profitable company.

Morndal also sits on the board of Swedish Mathem, which has a different business model.

I think SoftBank understands

Oda’s big financial news from last year was that Softbank stepped in with billions.

Recently, the Japanese giant has been talking about multi-billion dollar losses, and the company has sold several Scandinavian growth companies, such as Kahoot.

So, perhaps it was not surprising that Softbank remained on the sidelines this time around.

– We didn’t necessarily try hard to get them involved, but since they’re invested with us today, they had the opportunity, says Mintah-Kas.

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– In the new year, I talked about a video meeting with CEO “Masa” who said, “You have to grow fast.” What do you think he thinks about the brakes?

– It is true that they were the initiators of the aggressive plan that was drawn up, but I think everyone understands that the plans must be revised downward when the price of capital becomes much higher.

Not with: But Softbank CEO Masayoshi “Masa” Son may be supportive of the issue, according to Oda CEO Karl Munthe-Kaas.

Did you receive assurances that they will continue to participate?

– I didn’t receive any insurance or any message the other way, so I don’t know what they do with their mail. And we probably won’t know that either until they decide to do something. But we’ve talked through the capital process and I think they think it’s positive to bring in strong new investors.

Martin Gjølme at Summa Equity maintains that Softbank’s existence is not important to them.

– Oda has received her capital now, and we can also provide more if needed. So we are not dependent on other shareholders providing capital, although that would be satisfactory of course.

There are no plans for the stock exchange

Gjølme says that the three investors behind the capital injection all attract the same trinity:

sustainable profitable growth.

– All our investments are made against the backdrop of the United Nations’ sustainability goals, says Abstracts Partner.

Summa Equity partner Martin Gjølme.

In this regard, they let themselves be swayed by Oda’s findings on carbon dioxide emissions and food waste.

– Customers who shop at Oda help cut carbon dioxide emissions in half compared to physical groceries, and food waste is nearly a quarter.

Gjølme and Mörndal both say they have a long-term perspective on investing, which they define as five to 10 years. So they wouldn’t be any of the promoters of the IPO, and Monte-Cass replied that might be relevant at some point in the future.

– We can double the investment and change our plan, if necessary, so we don’t have any thoughts about getting out in the short term, says Morndal.