Cannabis Deal Tracker: Investment and M&A Activity in the Cannabis Industry May 25th - May 29th, 2020
June 3, 2020 (Investorideas.com Newswire) CAPITAL RAISES: Transactional Activity: Week 22 ended May 29, 2020, was slow in terms of number of transactions and specifically in the very low average tranche size. We recorded 7 capital raise transactions totaling $7.0 million, vs. 18 transactions totaling $190.8 million during the same week in 2019. Average tranche size was $1.0 million, vs. $10.6 million in the prior year period.
Largest Cap Raise: The largest raise was closed by Ovation Science Inc. (CSE: OVAT) which announced a private placement offering of 4,000,000 units at a price of $0.42 per Unit for total proceeds of C$1,680,000. Each Unit consists of one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase an additional share at a price of $0.60 per share for an 18-month term.
Public vs. Private Cap Raises: Of the 7 capital raises, 6 (or 86%) were closed by public companies. So far in 2020, public companies have accounted for 79% of all capital raises, vs. 66% for the same period in 2019. In 2020, public companies have accounted for 89% of total dollars raised, vs. 72% for the same period in 2019. This is indicative that investors are continuing to choose to invest in the cannabis sector through pubcos that offer greater liquidity. Also driving this increase is the recovery in cannabis stocks in general coming off of the lows reached after the initial impact of COVID-19.
Public Company Listings: Of the 6 public company capital raises, all are listed on Canadian exchanges (5 on the CSE, 1 on the TSX), 3 are U.S. exchange listed (OTC), and 1 is listed on the Frankfurt Stock Exchange.
Equity vs. Debt Cap Raises: Equity-based capital raises accounted for 6 of the 7 transactions, with a convertible debt-based financing accounting for the other deal. Of the 6 equity deals, 4 had attached warrants as part of the raise.
Largest Debt Raise: The one debt-based transaction was completed by Nutritional High International (CSE: EAT) (OTCQB: SPLIF), which announced a US$0.20 million convertible debt financing. The debt carries a 12.0% coupon and has a three-year term ending May 29, 2023.
Cap Raises by Sector: The Infused Products & Extracts sector accounted for 4 of the 7 cap raises, with Software/Media, Biotech/Pharma and Investments/M&A accounting for one deal each. As the “Capital Raises by Sector” chart below indicates, we’ve witnessed much greater diversity in sector investment this year than in 2019, indicating to us that the industry is maturing beyond state licensed operators and that investors are increasingly attracted to ancillary companies.
MERGERS & ACQUISITIONS
Transactional Activity: We recorded no M&A transactions during Week 22 of 2020, vs. 9 in the prior year period.
The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:
- Industry Sector (one of 12 sectors, from Cultivation to Brands)
- Dollar value of the transaction
- Region in which the deal occurred (country or U.S. state)
- Status of the company announcing the transaction (Public vs. Private)
- Deal structure (equity vs. debt)
- Key deal terms
The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy.
Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $45 billion in aggregate value.
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About Viridian Capital Advisors, LLC
Viridian Capital Advisors (www.viridianca.com) is a financial and strategic advisory firm dedicated to the cannabis market. We are a data- and market intelligence-driven firm that provides investment, M&A, corporate development, and investor relations services to emerging growth companies and qualified investors in the cannabis sector. Our banking practice, through broker-dealer Bradley Woods & Co. Ltd. (Member FINRA/SIPC), provides capital and M&A services to fund the growth of our clients, while our advisory practice helps to position and build their businesses. Our team's decades of high level operating and transactional experience on Wall Street in a variety of emerging sectors, allows Viridian to provide comprehensive strategic and financial solutions that assist cannabis enterprises in realizing their full potential.
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