East 33 Limited (ASX:E33) Co-founder and Executive Chairman James Garton talks about the company's dominant position as a supplier and distributor of Sydney Rock Oysters, ambitions ahead of its listing on the ASX and the potential of the world-class Sydney Rock Oyster as a luxury food alongside French Champagne or Beluga Caviar.
Melissa Darmawan: Hello, Melissa Darmawan for the Finance News Network. Joining me from East 33 is Co-founder and Executive Chairman James Garton. James, nice to meet you.
James Garton: Likewise. Very nice to meet you, too.
Melissa Darmawan: Firstly, can you start off with an introduction about the company?
James Garton: Well quite simply, we are the Sydney rock oyster company. We're the largest producer, distributor, supplier and exporter of Sydney rock oysters in the world. Our business is vertically integrated and we cover an online platform across all of the East coast of Australia and we supply around 500 restaurants. But more importantly than all of that, we are a collaboration of fourth and fifth generation farmers that are truly unique to Australia.
Melissa Darmawan: Before we talk about the business in detail, what makes Sydney Rock Oysters so unique?
James Garton: It's the rarity. It's the provenance and heritage. Sydney Rock Oysters grow in only 41 locations in the world, and there's only 75 million of them produced every year. To give you some context, there's more than 120 billion Pacific Oysters produced globally. But it's that rarity of location that means that the Sydney Rock Oysters' taste profile is celebrated by chefs all over the world.
Melissa Darmawan: Now to the business and plans once listed. Can you tell me more about the financials?
James Garton: I certainly can. We've raised $12 million prior to our IPO. And with that money, we invested heavily in growth. And that growth in infrastructure has meant that we've got a tremendous number of oysters in the water. So from our perspective, the financials about taking a historic business which was making $4 million, and through that growth, turn it into making $8 million, and if we hit our forecast, $20 million in FY '23. So it's all about top and bottom line growth
Melissa Darmawan: And post IPO?
James Garton: So investment and continuing to spawn the growth of the business, it comes down to three things for us: expanding our volume, realizing economies of scale through the consolidation of the six businesses that we're acquiring on the IPO, and then selling that oyster volume through the two higher value channels: the online business, where we make roughly three times profitability, and in the export market where we make roughly five times profitability. So it's growth in volume, growth in revenue and growth in bottom line EBITDA.
Melissa Darmawan: Now to the IPO. How much are you looking to raise, and where will the funds go?
James Garton: We're raising $32 million in equity, but we're very delighted to be supported by National Australia Bank, that's also providing us with $10 million in senior debt funding. With that $42 million, we'll be acquiring $27 million worth of some of the rarest Rock Oyster farms on the planet. In addition to those acquisitions, we're going to be investing significantly, some $4 million, to grow our capacity from 9 million oysters a year to 18 million per annum. We're also going to be investing nearly two and a half million dollars to promote and shine a spotlight on the rareness, heritage and provenance of the Sydney Rock Oyster to promote that into the international markets.
Melissa Darmawan: What are the risks?
James Garton: Well, as in every business, there's never any no risk situations. So it comes down to, from our side, the fact that we need to integrate all these businesses, we need to manage and make sure that we've got a supply that can meet the demands of that international market. Once we turn that on, the volume demand is tremendous. So the big risk for us is being able to scale up the business sufficient to meet the global market.
Melissa Darmawan: And how can investors get involved?
James Garton: Well, IPO is open until the 30th of November, which is Monday next week. I would encourage them to either visit our website directly, east33.sydney, where they can download the perspectives; contact our lead manager, Blue Ocean Equities, or just contact their financial advisors.
Melissa Darmawan: Last question, James. Is there anything else you would like to add?
James Garton: I think it's about an opportunity for both the investors to connect with the farms and acquire what is quite simply some of Australia's rarest farming assets. With just 4,300 hectares available of Sydney Rock Oyster farms, East 33 is set to own over 10%. And that is the key driver to long-term growth.
Melissa Darmawan: James Garton. Thanks for the introduction, and good luck with the listing.
James Garton: Thank you very much.