Plant-based protein product manufacturer Beyond Meat floated on the stock market to great fanfare earlier this year, but Kames Capital’s Craig Bonthron believes this is not the only sustainable IPO creating interesting opportunities.
Beyond Meat, which aims to remove the animal from the protein production chain by creating replacement meat products from plants, carried out its initial public offering (IPO) in early May and its share price has surged since. The stock debuted at $25 but surged by almost 700 per cent to trade at close to $200 per share at the start of 18 June’s session.
Bonthron manages the €93m Kames Global Sustainable Equity fund, which is ranked top-quartile in the IA Global sector over three years after making a 66 per cent total return. He noted that this is not the only sustainable company that plans to go public this year.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
“We are seeing increasing interest in companies which are aiming to – or are already – making positive changes to the world, be it at an environmental level or otherwise,” he said. “Beyond Meat is a case in point, and the opportunity longer term for that business is currently a popular topic, but there are other opportunities still to come as more private businesses go public.”
Below, the manager highlights three sustainable companies that plan to list, or have done recently, that he will be keeping an eye on.
Slack
Bonthron described workplace messaging service Slack – which offers a cloud-based set of proprietary team collaboration software tools and online services – as “probably the most interesting tech IPO” of 2019.
The company launched in August 2013 and offers users tools such as persistent chat rooms that are organised by topic, private groups and direct messaging. Communities, groups or teams can be invited to join a ‘workspace’ to aid organisational communication, while the service integrates with major third-party services such as Google Drive, Dropbox and Trello.
“One of the fastest growing ‘software as a service’ productivity tools available today, it has the potential to revolutionise the way we communicate in the business world, taking out inefficient and noisy email and Skype-type communication tools,” the Kames Global Sustainable Equity manager explained.
“The productivity, collaboration and resource efficiency benefits are clear and directly and indirectly benefit more sustainable economic growth.”
Bonthron said that US-based Slack is currently one of the fastest growing companies in the world. The firm came to market towards the end of June in a direct listing – rather than a traditional IPO – and started trading on the New York stock exchange at $38.50, significantly above the $26 guide price.
Airbnb
The accommodation-sharing site Airbnb will be recognised by many, thanks to the success it has had in recent years allowing people to rent out their properties and find accommodation outside of traditional providers such as hotel chains.
“With a mooted valuation of $40bn, this world-famous business needs no introduction,” Bonthron said. “Through the use of innovative technology it has quite literally made what seemed like an impossible scenario – renting out your own house to strangers – into something commonplace.”
He argued that the sustainability element of the company comes from the fact that it makes existing assets such as houses and flats available to more people, which reduces the need for carbon-intensive hotel building across the globe.
Airbnb was founded in 2008. Its accommodation marketplace claims to offer more than six million places to stay in 191 countries and almost 100,000 cities; in addition, it averages more than 2 million people staying in properties through Airbnb per night.
Robinhood
The third sustainable IPO that Bonthron is watching is a no-fee trading platform Robinhood. The company, which is a stock-trading app and cryptocurrency exchange, has a market cap of around $5.6bn following a private funding round.
The platform has around 5 million accounts, meaning that only five years after launch it has surpassed its main rival E-Trade in terms of users.
“It is fair to say the business has revolutionised online trading – earning money from interest on account balances, margin trading and selling order flow to stock exchanges rather than fees – and it is now a favourite with millennials,” the Kames Global Sustainable Equity manager said.
“As the name suggests, this is a mission-driven company built on the idea of inclusion. No longer is access to financial trading and information necessarily expensive and via a personal stock broker. Now the informed ‘wee man’ can benefit too.”