Listing during a global pandemic had some surprising upsides for East 33 (ASX: E33), a leading producer and supplier of Sydney rock oysters. It listed on the ASX on 26 July 2021, raising $32 million.
The company was founded in 2019, bringing together 10 founding farmer families to create Australia’s largest Sydney rock oyster producer, processor and supplier. Its operations cover all aspects of the industry from hatchery, nursery and production to shucking and sales, including restaurant programs and international trade.
James Garton, CEO of East 33, says that independent oyster farmers have faced a number of challenges in recent years, including a shortage of labour as workers move to cities.
“The strategy behind East 33 was to provide these businesses – some of which had been operating for over 100 years and which were primarily family businesses – with the structure and support they needed to continue growing and thriving.
“An integral component of this strategy was to undertake a public listing that would provide the capital support to achieve the growth plans, in particular expanding internationally.”
While East 33 considered other funding options, such as private equity, it decided that it wanted to maintain a level of Australian ownership and control.
“We felt that, as a distinctly Australian business, listing on the Australian Securities Exchange was a more appropriate strategy for us. Sydney rock oysters only grow at a latitude of 33 degrees, comprising just 41 locations on the east coast of Australia, so remaining an Australian based company is very fitting,” Mr Garton said.
The initial plan was to list in late 2020, but the impact of the COVID-19 pandemic, and other developments including regulatory changes and international trade wars, meant the IPO was delayed to mid 2021.
“The outbreak of the pandemic, unsurprisingly, had a pretty dramatic impact on our plans and on the business, although we were always confident that it only meant a delay in listing.
“Indeed while there were challenges – such as our primary market of restaurants going into lockdown – at the same time there were also a number of upsides to listing during a pandemic.
“For instance, late in 2020 the government passed legislation allowing digital signatures to be used, which was hugely beneficial when considering the enormous amount of documentation required for the listing process. While this was only a temporary measure, we think it is one that should be permanently introduced.
“Another benefit was that holding roadshows virtually, rather than in person, was extremely efficient and meant that logistics and timings ran very smoothly.
“Furthermore, while undertaking an IPO during a global pandemic is probably no-one’s first choice, it did prove the resilience of our business model to our market – we were stress-tested to the extreme but were still able to grow the business during the process with the addition of two more farmer businesses prior to the final listing date, and to undertake a successful IPO.”
In terms of the IPO process, Mr Garton said that while it is very time-intensive, businesses that are considering listing shouldn’t be too daunted by the concept.
“The process is time-consuming and demanding but it’s not difficult, especially if you have the right teams, both internally and externally.
“Our structure meant that we have a second layer executive team whose primary responsibility and focus remained on running their own operations and day to day business activities. And with the right project management team and advisers, we found the process flows without as much distraction as you may think.
“In this, Lucio Di Giallonardo and his team at HLB Mann Judd in Perth were instrumental. They provided practical and expert advice and support, while displaying a level of integrity that was outstandingly good. There was a number of highly complex technical issues involved in the listing process and they found solutions to workshop with us and were always realistic and supportive in what we wanted to achieve.”
Since listing, East 33 has realised a number of its growth strategy plans, including investing in the current oyster farms to improve processes such as hatchery and production.
“In addition, there have been intangible benefits to going public,” Mr Garton said.
“For example, the perception among staff has shifted, changing from seeing themselves in a job, to seeing a career ahead. It has also had a positive impact on our relationships with suppliers and our community, helping them to see our business as stable and with a strong future.”
This case study was first published in the 2022 IPO Watch Australia Report.