There are a number of potential long-term opportunities in sustainable businesses which ESG-focused investors should be watching amid the deluge of IPOs taking place this year, Kames Capital’s Craig Bonthron has said.
IPO season is in full swing across the globe, with scores of businesses coming to market in the US and elsewhere. Big names such as Uber have already floated, with some – such as Beyond Meat, the plant-based protein product manufacturer – already catching the eye of investors.
Beyond Meat has surged significantly from its IPO price of $25, currently trading at nearly four times that.
Bonthron, manager of the Kames Global Sustainable Equity fund which has delivered top quartile returns over the last three years versus the IA Global sector*, said there are a number of other listings investors should be aware of.
“More and more investors are interested in sustainable investing and are looking at sustainability as a key factor when making their investment decisions,” he says,
“As part of this, 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.
“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 Bonthron looks at some of the other potential standout names scheduled to list later this year.
Slack is probably the most interesting tech IPO still to come this year. 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 productivity, collaboration and resource efficiency benefits are clear and directly and indirectly benefit more sustainable economic growth.
One of the fastest growing companies in the world currently, it is expected to IPO with a value around $17bn, but given the current appetite for these sorts of issues, we wouldn’t be surprised if it comes in much higher.
With a mooted valuation of $40bn, this world famous business needs no introduction. 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.
Sustainability comes from the fact that, by leveraging existing assets (houses and flats) and making them available to more people, reducing the need for hotel building globally which is very carbon intensive.
Following a private funding round recently Robinhood, the no fee trading platform, now has a value of $5.6bn.
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. 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.
And one which may be too hard for investors to swallow….
Hoping to follow in the footsteps of Beyond Meat, Impossible Foods is expected to float later this year. It too has a ‘bleeding’ burger already used in Burger King and other places across the US.
Yet to expand outside the US, Impossible is smaller (currently its products are only available in restaurants and not in any supermarkets) and it may also have problems launching in Europe because it uses genetically modified processes to make its products.
It also makes soy-based burgers and this needs to be rigorously monitored due to links to deforestation of rainforest in emerging markets. Nonetheless, with a similar story to tell as Beyond Meat, it is one for investors to follow closely and they are likely to be a meaningful part of the broad set of solutions to reduce finite resource use and more sustainably support human life on earth.
* As at 30/04/2019