Europastry: Ready Baked for IPO

Inspired by his experiences in France, Pere Gallés replicated an innovative technique that marked the beginning of Europastry's journey. Since its founding in 1986, the Catalan company has grown significantly, becoming one of the leaders in the frozen bakery industry with operations in over 80 countries across five continents. Let's take a closer look at Europastry's story and the details around its potential IPO.

• International breakthrough: Europastry expanded rapidly during the early 2000s after the successful launch of Dots and the acquisition of one of its largest competitors Frida Alimentaria.

• Impressive financials: The Catalan company has achieved an impressive CAGR of 14,5% in net turnover over the past decade.

• IPO edging closer: For the second time this year, Europastry decided to postpone its IPO due to political turbulence.

The origin of Europastry dates back to 1983 when founder Pere Gallés discovered a bread that was frozen before fermentation during a trip to France. This sparked the interest of the Catalan baker who eventually succeeded in replicating the technique after some years of research and testing. The method involved allowing the yeast to ferment, baking the bread to around 80% completion, and then freezing it to preserve its quality. After mastering the technique, Gallés founded Molino Viejo in 1986 and started producing and selling its frozen bread.

In the early years, Europastry focused on delivering bread to clients within the metropolitan area of Barcelona. Growth accelerated after the acquisition of Fripan in 1988, which expanded the company's customer base, particularly among bakeries. The company's international business gained momentum following its role as a supplier to the 1992 Barcelona Olympics, where it provided products for the Olympic Village. To meet rising demand, Europastry opened a new production facility in Azuqueca de Henares, Spain, positioning it to capitalize on the expanding market.

In the late 1990s and early 2000s, growth accelerated for the company. The launch of the Dots brand opened doors to international markets, with these products eventually being distributed to major global chains like Starbucks and Dunkin' Donuts. Shortly after, the company acquired one of its largest competitors, Frida Alimentaria, and expanded its product line to include pastries. The introduction of pre-fermented ready-to-bake pastries revolutionized the industry, further driving growth. Its successful diversification, along with a growing international footprint, inspired a rebranding to Europastry.

Since its international expansion in the early 2000s, Europastry has evolved into a leading player in the frozen bakery industry, operating in more than 80 countries with 27 production plants across Europe and the Americas. By 2023, the company offered over 4,900 product categories, with pastries representing 56% of net turnover, breads 42%, and others accounting for 2%. That year alone, Europastry launched over 480 new products. The company's diversified customer base includes more than 650 third-party distributors, delivering its products across five continents to retailers, food service providers, and traditional bakeries.

In 2023, Europastry reported a net turnover exceeding €1.3 billion. For the last ten years, the company has achieved an impressive CAGR of 14.5% in net turnover, with organic growth of over 10%, and is targeting a continuation of the strong trend in 2024.

The Gallés family maintains a large majority ownership of Europastry, controlling roughly three-fourths of the company. Additionally, MCH Private Equity holds a substantial stake, while a smaller share is owned across the company's management team.​

Europastry is now looking to list its shares on the public markets to continue its international expansion. Jordi Gallés, President of Europastry and son of founder Pere Gallés, recently elaborated on the company's reasons for going public:

“Europastry is at the next stage of its development, and this IPO is the natural way to fund and accelerate our growth strategy to foster our leadership position in the frozen bakery segment while deleveraging and maintaining a prudent capital structure. Through international expansion, continued product innovations and a value-accretive acquisitions strategy we want to cement our position as a leader in the global frozen bakery market and promote sustainability in the sector. We are excited about our future as a listed company.”

The company had initially planned to go public earlier this year but delayed its offering due to political instability in France because of the effect it had on European equity markets. After kicking off its IPO preparations for a second time, Europastry decided to postpone its plans to go public in October 2024.

If and when the company lists its shares, it will likely be on the Barcelona, Madrid, Bilbao, and Valencia stock exchanges, which are collectively part of the Spanish stock exchange group, BME.

Europastrys most recent offering consisted of a primary offering of new shares valued at approximately €210 million ($234 million) and a secondary offering of existing shares from its primary shareholders, including the Gallés family, and MCH Group. The company was targeting a price range of €15.85 to €18.75 per share, which implies a market capitalization of €1.45 billion ($1.62 billion) in the middle of the range. If the company deems market conditions favorable eventually, it might target a similar valuation.

After mastering the technique of pre-baking bread, Pere Gallés and his family have built one of the largest companies in the frozen baking industry, with its business stretching across the whole world. As the Gallés family now takes the company public, Europastry is positioned to leverage new opportunities and continue its international expansion.

Further reading: Baking a Family Fortune: The Rise of Lotus Bakeries