English winemaker Chapel Down (AIM:CDGP) is putting itself up for sale as part of a review of the business just seven months after floating on London's AIM.
Even though the company, the largest wine producer in the UK, is profitable and growing, the board is launching the review to look at options to fund investment in new vineyards and a new purpose-built winery.
"Considering the timeline of these investments, the board believes that it is now appropriate to review the full range of long-term funding options that support this plan," it said.
Also to be considered are "all alternatives", including investment from existing or new shareholders or selling the company, which moved from the Aquis Exchange to AIM last year.
Last year, Chapel Down grew net sales by 15% to £17.9 million and earnings jumped 87% to £5.4 million.
The company said today that it remains on track to deliver double-digit sales growth in 2024 and has "significant headroom" in its £12 million debt facility, which it can also extend.
Shares fell 5% to 62.21p in early trading on Tuesday.
Analyst Russ Mould at AJ Bell said: "Coming so soon after moving from the Aquis stock exchange to AIM, one might think something negative is afoot.
"Yet it makes sense to have raised the company’s profile by switching exchanges ahead of putting the ‘for sale’ flag up."
Having made a name for itself over the two decades it has been listed, the business "appears to have hit the ceiling in terms of scale", Mould said.
"To grow even more, it really needs a big slug of cash to invest in the business and that might be better coming from a new, bigger owner, rather than going cap in hand to shareholders on an ad hoc basis.
"Plenty of big drinks companies would be in the market for a niche player like Chapel Down as it could add something new for them to get their teeth into, and also as a way of cross-selling products."