Cannabis Deal Tracker: Investment and M&A Activity in the Cannabis Industry June 1st - June 5th, 2020
June 10, 2020 (Investorideas.com Newswire) CAPITAL RAISES: Transactional Activity: Week 23 ended June 5, 2020, saw a similar number of transactions to the prior week, but a significant pick-up in total dollars raised and the average tranche size. We recorded 6 capital raise transactions totaling $73.4 million, vs. 14 transactions totaling $195.7 million during the same week in 2019. Average tranche size was $12.2 million this week, vs. $14.0 million in the prior year period.
Largest Cap Raise: Valens GroWorks Corp. (CSE: VGW), a multi-licensed provider of cannabis products and services, raised $30.0 million in a unit deal. Each Unit is comprised of one common share of Valens and one-half common share purchase warrant of the Company offered at a price of $2.95 per Unit. Each Warrant will be exercisable to acquire one common share of the Company for a period of two years following the closing date at an exercise price of $4.00 per Warrant Share, subject to adjustment in certain events. In the event that the volume weighted average trading price of the common shares for ten consecutive trading days exceeds $6.00, the Company shall have the right to accelerate the expiry date of the Warrants upon no less that fifteen trading days' notice.
Public vs. Private Cap Raises: Of the 6 capital raises, all were closed by public companies. So far in 2020, public companies have accounted for 80% of all capital raises, vs. 66% for the same period in 2019. In 2020, public companies have accounted for 90% of total dollars raised, vs. 72% for the same period in 2019. The dramatic recovery in cannabis stocks, both in terms of price and volume, is driving public companies to the capital markets to seek both equity and debt financings.
Public Company Listings: Of the 6 public company capital raises, all are listed on Canadian exchanges (2 on the TSX, 2 on the TSXV and 2 on the CSE), and 5 are also U.S. exchange listed (OTC).
Equity vs. Debt Cap Raises: Equity-based capital raises accounted for 5 of the 6 transactions, with a convertible debt-based financing accounting for the other deal. Of the 5 equity deals, 4 had attached warrants as part of the raise.
Largest Debt Raise: The one debt-based transaction was completed by Acreage Holdings, Inc. (CSE: ACRG.U) (OTCQX: ACRGF) (FSE: 0VZ), which announced an $11 million private placement of convertible debt. The Convertible Debentures will bear interest at 15% per annum and are secured by the Company's medical cannabis dispensaries in Connecticut. The Convertible Debenture is convertible by the holder in whole or in part after September 30, 2020. Prior to September 30, 2020, the holder may convert only $550,000 of principal amount. The Convertible Debenture is convertible into Class A Subordinate Voting Shares of the Company at $1.68 per share, subject to the conversion limitations described above. The Company has the right to redeem up to 95% of the principal amount on or prior to September 29, 2020 without penalty.
Cap Raises by Sector: The Cultivation & Retail sector accounted for 3 of the 6 capital raises, with Biotech/Pharma accounting for 2 transactions and the Hemp sector representing 1 transaction. 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 23 of 2020, vs. 8 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.
*Copyright © 2020 by Viridian Capital Advisors
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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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