Oyster producer and seller East 33 is about to kick off a $32 million IPO campaign that will culminate in a December 3 listing.
The company specialises in Sydney Rock Oysters (SROs), a unique species only found in Australia.
East 33 intends to invest in further nursery and farm assets as well as a new processing and distribution facility. It will control 9 per cent of global production of SROs following the offer.
Speaking with Stockhead, East 33 boss James Garton said the deal would help the company expand. He also think it will benefit the oyster farming community as much as his firm.
“The opportunity to list provides incremental liquidity to continue to acquire businesses while providing a future for the next generation to come through,” Garton said.
“We didn’t want to go down the private equity path and we got past the amount of money that me and my fellow founders were able to fund by ourselves.”
“We wanted to keep it as an Australian company and that’s why we thought the combination of being an Australian business, while providing a capacity to acquire further rock oyster businesses and provide long term continuity for the next generation [of oyster farmers].”
A local seller
East 33 primarily sells locally into New South Wales.
The company has significant scale in the industry and across restaurant, wholesale and retail.
While restaurants were down during COVID-19, retail sales actually soared in March and April as customers continued to demand the premium product.
“85 per cent [of SROs] get consumed in NSW. There hasn’t been a rock oyster produced that hasn’t been purchased,” he said.
“It’s a matter of holding the stock to meet the market at the right time. So we feel privileged to have a product that is a bellwether through all market conditions.”
The company is eyeing off being an exporter eventually but COVID-19 has put that on ice for the time being.
A unique listing
Being in seafood, East 33 is a unique IPO in 2020 and Garton thinks this will help it stand out.
He says East 33 undertook a convertible note fundraising some months earlier. Many of those investors are following on now and other newcomers want a different IPO.
“Given the wealth of speculative technology-based IPOs that are afoot at present, it has been very refreshing for institutional fund managers to see 300 per cent growth but a solid balance sheet, a solid track record of earnings,” Garton says.
“And that resonated really, really nicely. We’ve got strong institutional demand and we’re trying to now balance the institutional and the retail side of things.”
However, East 33 will not be alone – it will join a tribe of around a dozen ASX seafood stocks.