Jamie Gray

Jamie Gray is a business reporter for the New Zealand Herald and APNZ wire agency

The Bakery's next batch

Start-up Moa is set to list on the NZX, and Business Bakery is looking at other possibilities.

Stephen Sinclair and Grant Baker two of the members of the Bakery -- the team that is behind Moa Beer. Photo / Greg Bowker
Stephen Sinclair and Grant Baker two of the members of the Bakery -- the team that is behind Moa Beer. Photo / Greg Bowker

In the early days, the three men behind vodka company 42 Below found it difficult to get the attention of investment bankers and sharebrokers.

Thanks to a string of successful deals since 42 Below, it's not a problem Geoff Ross, Grant Baker and Stephen Sinclair face these days.

In an interview, Baker concedes that perhaps the finance community found their larrikin image in the early days a bit much.

There was perhaps also a perceived "smoke and mirrors" element attached to 42 Below, probably arising from a lack of investor understanding about how brands work.

"When we listed 42 Below, it was hard to get a meeting or to get a broker to even talk to us," Baker says.

Financial institutions steered clear, and the company attracted a fair amount of bad publicity at the time, Baker recalls.

But the financial community stood up and took notice when 42 Below was sold to liquor giant Bacardi for $138 million in 2006 after just a short time on the NZX board.

Since then, the Business Bakery has taken a major position in Dorchester Pacific and floated fragrance maker Ecoya, among other things.

Its latest project, Moa, is set to list tomorrow.

"When we did Ecoya, it was a little bit easier," Baker says, adding that a couple of institutions were on the company's register when it listed in 2010.

"This time we've had good engagement with the brokers, so there were a number of people bidding to do the work [on Moa] and a number of people were keen, even though it was a relatively small float," he says.

The way 42 Below evolved meant that Ross - who started off by making vodka in his garage - became the frontman.

Sinclair - the accountant - became responsible for the numbers. Baker - the salesman - sees himself as being somewhere in the middle of the two.

It's the way they melded together then, and it is largely the way it works with the Business Bakery now.

Baker says with Moa, there is an element of unfinished business, because for them the 42 Below story was over so quickly.

Both Ecoya and Moa are start-ups, but Dorchester has been around since 1985. Baker and partners boldly strode into the highly fraught finance company sector and took a big stake in Dorchester Pacific in 2009.

"Dorchester was definitely a rescue," Baker says. "It was in a lot of trouble at around that time. It had had negative equity and was in pretty bad shape," he says.

"Looking back, it was a big ask to have a go at it, but we did and we've gone from having negative equity to a stage where it has $30 million in net assets, post the acquisition of EC Credit Control", a credit management and debt recovery service.

Baker says Dorchester was expected to make a profit of around $1 million this year and around $4 million to $5 million the following year. "It has been a turnaround story in a relatively short period of time."

Baker says Dorchester, while troubled, was tarred with the same brush as the 65 or so other finance companies that went to the wall over 2006-07. But he says Dorchester was more diversified than most, being involved in insurance and motor-vehicle finance.

Baker says the Business Bakery's next investments will most likely be into their existing three businesses, but the company is looking at a couple of possibilities.

With Moa soon to hit the NZX boards, is there a chance that the Business Bakery could, at some point, become a bigger player in the local capital markets scene? "We are hoping to," says Baker.

- APNZ

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