Health food business looks to IPO


Aged 20 and 21, the pair struggled to get finance from the banks for the business and had to fund its launch on their credit cards.

“It was easier to get high-limit credit cards than business finance because we had careers and we had jobs,” Mr Brown said.

From that beginning, Forbidden Foods has grown to supply over 3000 retailers, 500 restaurants and food manufacturers exporting to customers in New Zealand, Ireland, Singapore and the United States.

There’s a lot of capital available and it’s a very liquid market.

Marcus Brown

It sells organic and conventional rice, rice and specialty grain flour and health food ingredients like protein ball mixes to customers including Woolworths, Costco and Subway.

The business, whose products include the brands Funch and Sensory Mill, last year turned over more than $3.6 million. It forecasts turnover of more than $5 million for this year.

Mr Brown said an initial public offering would enable Forbidden Foods to drive its growth as it looks to expand.

“The business was getting opportunities that we needed to say yes to. We needed a liquidity solution that was long-term,” he said. “We also believe it’s a really good way to access capital. There’s a lot of capital available and it’s a very liquid market.”

Mr Brown said Forbidden Foods needed $7 million to $10 million to execute its growth plans locally and internationally over the next five to seven years.

Forbidden Foods business includes protein ball ingredients through the brand Funch.

“It does actually make a lot of sense for high growth businesses and early stage businesses even though it does have a lot of legal compliance, and governance requirements. Once you set them up that’s pretty straightforward,” he said.

If Forbidden Foods does list on the Australian Securities Exchange, it will be an anomaly in a cohort of new listings dominated by resources and technology companies.

Analysis by HLB Mann Judd found by the end of November this year there had been just 61 listings for the year and partner Marcus Ohm said it was a “difficult” year for IPOs.

Only one food business listed, namely Candy Club Holdings, which closed a $5 million IPO at 20c a share but then dropped to a low of 5c.

Mr Ohm said: “The speculative capital is not there at the moment.

“The ASX seems to be anecdotally getting a bit tougher on some of the listings as well.”

However, the chief executive of a key investor in Forbidden Foods, Tiverton Agriculture Impact Fund, is optimistic about the future for the business.

Chief executive Nigel Sharp said he was impressed by Mr Brown and Mr Milani’s innovative approach despite the challenges ahead.

“It’s a young business and it’s always hard for young businesses as they evolve and I think that is the biggest risk,” Mr Sharp said. “But they have got through the hardest years and are now into taking the innovation further.”

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