THE GIST
After investing $15.2 million into Copenhagen-based beer company Mikkeller in 2020, a New York-based private equity fund has infused another $6.1 million, increasing an ownership stake for Orkila Capital LLC to a range that falls between one-third and almost one-half of the business. The news was first reported Dec. 29 by Danish financial news site Borsen.
The injection of cash into a hospitality business during a pandemic that has wreaked havoc on the restaurant and bar industry is not anything out of the ordinary. But the way Orkila has woven itself into an interconnected web of holding companies that manage Mikkeller’s business likely increases the firm’s power within the Danish company. Neither Mikkeller or Orkila has elaborated on the strategy of deepening the partnership aside from the fact that the beer company needed the money as it works out of a COVID-related decline—support from Orkila is meant to shore up Mikkeller’s budget.
According to a company audit, Mikkeller had a total income loss of about $4 million between 2019 and 2020. The report says that last year’s losses were “primarily a result of COVID-19 related restrictions, lockdown and general uncertainty across the globe heavily impacting our retail sales as well as wholesale to on-premise bars, restaurants.”
Borsen reported that Mikkeller founder Mikkel Borg Bjergsø has relinquished some ownership in the company to Orkila as a result of the most recent transaction. However, Mikkeller CEO Kenneth Madsen said via email that the transaction does not result in any changes to current ownership or controlling stakes. Madsen says the deal with Orkila is “a basic move to secure funding for 2022.”
Madsen declined Good Beer Hunting’s request for a phone interview, and did not address specific questions about the transaction posed to him by email. Orkila Capital also did not respond to a request for an interview.
WHY IT MATTERS
What this multimillion-dollar infusion from Orkila means for Mikkeller—a global beer company with dozens of locations worldwide—is made less clear by the company’s ownership structure. In a 2018 analysis, Good Beer Hunting found dozens of different companies had been formed over the years, each with varying degrees of ownership in different bars or businesses under the Mikkeller banner. This expansive network is presumably necessary given the company’s different owners, partnership structures, and the many countries in which it does business. At the time, Bjergsø described the number of companies he owns around the world as “more than 25.”
A focus on experiential entertainment as well as alcohol companies creates potential synergies for Orkila if it can leverage the two to serve each other. Orkila has already invested an undisclosed amount in Swedish beer company Omnipollo and its website states that it operates in the media, entertainment and consumer sectors with investments in events companies such as:
Ironman Group, producer of the Ironman competitions
Bellator, a mixed-martial arts tournament and promotions company
Down the Drain, a Scandinavian independent music festival and promotion platform.
In the 2020 audit, Mikkeller’s management noted “a temporary slowdown in revenue from wholesale overall” as the company transitioned its distribution network toward “more long-term sustainable business partnerships.” The company also relies on its annual Mikkeller Beer Celebration Copenhagen festival for both revenue and brand-building, an event that came under serious pressure this year after dozens of breweries withdrew from the invitational beer festival in opposition to the company’s handling of workplace complaints.
With its wholesale business in transition and on-premise business still reeling due to COVID, external partnerships with events such as those Orkila already invests in could provide a necessary source of financial revenue. Whether at an athletic competition or a music festival, there’s now an increased direct connection—through Orkila—between events and beer.
Association with Mikkeller, though, has proved to be something of a liability over the past year. The company faces intense public scrutiny for harmful workplace conditions, and in November, its business partnership for a beer brand and a pair of collaborative brewpubs with 3 Floyds Brewing dissolved.
Orkilla’s increased investment, to the contrary, shows some faith in the business prospects for the beer brand. Venture capital is rarely a long-term investment, though, and Orkila may only be seeking to return Mikkeller to profitability so it can deliver its return on investment. Even after a torrid year for Mikkeller’s brand, the two parties have clearly decided to stick it out and have found common ground to the tune of $6 million.
It is out of the ordinary in beer to reach a second stage of investment between private equity and brewery.
In 2015, Dogfish Head sold 15% to LNK Partners, but then sold completely to Boston beer in 2019.
SweetWater sold an undisclosed minority stake to TSG Consumer Partners in 2014 before its sale to Aphria, Inc. (now Tilray, Inc.) in 2020.
Even Three Weavers exited from a deal with CANarchy Craft Brewery Collective before deepening financial ties.
The uniqueness of Orkila and Mikkeller doubling down on their relationship stands out in this regard. But records shed light on how Orkila’s new investment and ownership stakes relate to Mikkeller’s company structure. Here’s what the Danish database of business records indicates as of Dec. 30, 2021:
There has been no ownership change for Mikkeller ApS, Mikkeller’s parent company, since March 2020, when Jesse Michael du Bey, Orkila’s managing partner, took an ownership stake.
Mikkeller ApS is owned by Craft Brewery Holding ApS, a holding company which itself is legally owned by BJERGSØ HOLDING ApS. BJERGSØ HOLDING ApS lists its secondary purpose as: “Leasing of intellectual property rights and the like, other than copyrighted works,” a purpose in line with the brand licensing and franchise-like structure Mikkeller has set up for its bars, bottle shops, and breweries around the world.
BJERGSØ HOLDING ApS is where ownership changes occurred related to Orkila:
Records show that the Copenhagen-based company has a new partial owner as of Dec. 17, 2021: Mikkeller InvestCo II LLC, which is registered at the same New York City address as Orkila Capital.
According to those records, U.S.-based entities called Mikkeller InvestCo LLC and Mikkeller InvestCo Trust III (which also shares a New York address with Orkila Capital) are also partial owners. Collectively, they own 30-45% (some ownership portions are listed as ranges of percentages) of BJERGSØ HOLDING ApS.
Mikkeller InvestCo LLC is registered to an address in Dover, Delaware which is not associated with Orkila Capital. (Delaware’s laws make it easy to incorporate businesses there. More than half of all U.S. publicly traded companies are incorporated in the state, making Delaware to LLCs what Las Vegas is to weddings.) The address in Dover, though, is associated with entities named in the Offshore Leaks investigation, a project of The International Consortium of Investigative Journalists, which subsequently published data revealed by the Panama Papers. While this association is not evidence of illegality or wrongdoing, it speaks to the complicated nature of Mikkeller’s ownership structure and Orkila’s investment.
That listing says the address was linked to a company called Yili Carborundum USA Inc., which the Securities and Exchange Commission lists as being owned by Master Silicon Carbide Industries, Inc., which is in the semiconductor industry and appears to have ceased business operations in 2012.
Neither Mikkeller or Orkila responded to requests for an interview, leaving it unclear how the Dover address came to be linked to both Mikkeller investors and offshore business activities.
Orkila, via managing partner Jesse du Bey, also has ownership in Mikkeller’s San Diego brewery as of 2020. That brewery is owned by Stella Polly, Inc., a company formed in Delaware on May 13, 2015 and filed on Aug. 18, 2015 to do business in California. Danish records show du Bey is a “beneficial owner” of Stellapolly Craft Beer ApS as of March 2020. There, and in records of more than a dozen other holding companies related to Mikkeller’s bars and breweries du Bey is registered as being based in Germany.
Multiple owners and subsidiary companies aren’t an uncommon arrangement among global businesses, but with du Bey and his company getting more involved in Mikkeller’s operations, it expands the already vast network of people and companies already in place when it comes to managing that company.
Such interrelated entities make it nearly impossible to say what the infusion of cash from Orkila means in terms of Mikkeller’s future direction—and who calls the shots when it comes to the company’s future. One thing is clear: The investments Orkila has made in Mikkeller are far from “a basic move.”
Words by Kate Bernot