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Currying favour

“It’s an absolute nightmare, an expensive, painful process that takes up all your management time,” says Dynshaw Italia of the flotation he’s preparing. The 31-year-old became finance director of Cobra Beer in November 2001 and is grooming the company to list on the London Stock Exchange before the end of 2002.

Cobra is the UK’s biggest selling bottled Indian beer. It is known to lovers of Indian restaurants all over the country and was awarded the gold medal at last year’s Monde Selection World Quality Beer Awards. Meanwhile, its maker was recently listed in the Sunday Times Virgin Atlantic Fast Track 100 table of the UK’s fastest growing companies.

Given the public attention the flotation is already attracting, it is fortunate that Italia is no stranger to equity fundraising. In his previous role as financial controller of ebookers he was part of the internet travel company during its successful listing in November 1999 and, less than a year later, secured its second round finance package after the group FD was taken ill suddenly.

Italia’s decision to leave ebookers came when he was approached by Cobra’s founder, chief executive and owner of 72% of the company, Karan Bilimoria.

Bilimoria started Cobra in 1995 after creating a beer he thought was perfectly suited to accompany Indian food. Originally brewed on the sub-continent, it is now produced under contract by family brewer Charles Wells in Bedford. Cobra focuses on selling and marketing, rather than producing the product.

When Bilimoria, an accountant by training, decided he needed an FD to plan the float, Italia was an obvious choice. He had assisted Cobra’s first private placement in 1995 as an accountant with London-based family firm Talwar & Co, where he trained for several years before moving to KPMG in 1996. Cobra also needed to expand its board to maintain its impressive rate of growth. In five of the past six years it has grown its revenues by 50% and turnover now stands at £10m. Italia is well aware of the demands for further top line improvements that the City will place on the group.

Italia says that, despite being rooted firmly in the old economy, Cobra is comparable to his previous employer. “It’s a very similar atmosphere in that both companies are very fast growing. And the more you grow the tougher it becomes to keep repeating the performance,” he says. “One thing I learned from ebookers is that it is harder to go from sales of £10m to £15m than it is to go from £5m to £10m.”

By floating, the group hopes to keep the growth rates up by raising money to fuel expansion into new territories. The company already exports to 25 countries but wants to increase export volumes. “We have this huge opportunity to attack Europe and the US – the interest is there and the market is there,” Italia says. Other plans include producing lighter beers and expanding the group’s fledgling wine operations. There could even be an opportunity to sell the beer back to the heavily-regulated Indian market.

Italia will not know until the middle of the year precisely how much the group needs to raise to fund these plans. “I am currently putting together a solid business model,” he says. “As I learned at ebookers, cash is crucial in a fast-growing business.”

Another salutary lesson he acquired from the online group’s difficult second fundraising was that timing has to be perfect. “From my experience, you only get one chance to get it right,” he says. “You can’t assume you’ll get that second round of funding. We also have to decide whether to float on the Alternative Investment Market or go straight to the main market. It could even be that we wait two years until our valuation is higher and we can raise more.”

Italia will soon begin the search for financial advisers, lawyers and stockbrokers. His criteria will be tough. “There are good teams in banks and bad teams in banks, however good the bank’s name is,” he says. “It’s best to get a more experienced team – they need good knowledge of the market and need to be able to support the share price.”

Ultimately, however, Italia says the flotation is not just about raising money and paying advisers. “The idea of the float is to increase the brand’s profile, to give our employees options (which I think is crucial) and to give our customers and suppliers the opportunity to invest.”

Italia’s plan is therefore to ensure Cobra’s main customers (the UK’s 8,500 Indian restaurant proprietors, of whom Cobra does business with 80%) are given the chance to pick up shares in the company. He might just make some of them considerably richer. If he does, that “absolute nightmare” he is currently enduring will surely have been worth it.

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