AKANDA Corp has become the latest UK cannabis company to go public after launching on the NASDAQ stock exchange this week, seeing its stock soar around 350% above its listing price.
The young “seed to patient” medical cannabis operator, which originally planned to list on February 25, 2022, issued 4 million common shares at a price of $4 to the public under the ticker ‘AKAN’ on Tuesday March 15, 2022, its offer to close on March 17.
Tuesday’s trading saw shares of Akanda open at $30, before stabilizing later in the day at around $17, seeing the company’s market capitalization more than quadruple from the $116 million originally forecast.
As expected, this strong market debut enabled Akanda to raise $16 million in capital before expenses.
Its CEO Tej Virk tells BusinessCan that the company will “put capital to work”, building infrastructure at its growing plant in southern Africa, which has access to nearly 500 acres of land, while leaving “some room for mergers and acquisitions” .
BusinessCan announced in early February that Akanda had filed with the SEC to launch a public listing on NASDAQ, with its initially proposed price range targeting a stock price between $4 and $6, with an over-allotment option comprising an additional 600,000 shares.
One week before the registration date, Akanda revised its share price at the bottom of his initial $4 deposit, reducing the proceeds he planned to raise by 20%.
The following week, as war broke out in Ukraine and cannabis stocks across the world saw dramatic declines, Akanda postponed its initial listing date.
Regarding the delay, Mr. Virk said: “The reason why now is the time to list is that we need to raise vital growth capital to execute our business plan as the adoption of medical cannabis products in end markets increases. It should be noted that as a society we have jumped from crisis, from pandemic to conflict, which is damaging people’s mental health and medical cannabis is known to treat PTSD – so it’s definitely the right one time for Akanda.
As the global financial impacts of the war in Ukraine are only just beginning to be fully understood, Akanda’s decision to list on NASDAQ rather than a European alternative like the London or Frankfurt stock exchanges likely helped limit his exposure.
Since the start of the war, the S&P 500, which tracks the performance of 500 major publicly traded companies in the United States, has fallen just over 1%, while the FTSE and DAX indices have suffered much volatility. bigger.
According to Mr. Virk, who has been a banker for about 15 years and says he has “led over 100 IPOs and helped raise billions of dollars” during his career, NASDAQ represented Akanda’s best opportunity to raise equity. capital, despite its focus on EU markets.
“I did some legwork on different exchanges and definitely weighed those possibilities, LSE, Australia and beyond.
“And it’s really a function of flexibility and access to capital. I think there are more investors and better liquidity and flexibility around a NASDAQ listing. He just wins in every category… you really go into the trading champions league.
Akanda, which counts Bophelo Bioscience and CanMart as wholly-owned subsidiaries, said in its SEC filing that it needs the additional capital from its listing to pursue its current operating plan.
A big part of that strategy is building the 200-hectare Bophelo cultivation facility in the southern African country of Lesotho, one of the first countries to legalize the cultivation of medical cannabis on the continent.
It will “secure” its greenhouse infrastructure, improve its yields and improve its margins through a modular growth approach.
The facility would represent a “strategic long-term asset” for Akanda due to its ability to grow “high quality and affordable cannabis”.
Currently, the facility has only achieved GACP qualification, the minimum standard to enter the global supply chain, but while the company is said to be assessing whether to aim for full EU GMP certification, it is not. does not consider it essential to bring products to market.
This is due to its partnerships with a number of leading carriers, including Cantourage, providing Akanda with a supply route to Germany.
Its distribution arm CanMart already imports and distributes medical cannabis to pharmacies across the UK, and Akanda is reportedly working to turn it into an “international marketplace”.
The marketplace, which is expected to sell a range of dried flower and extract products, represents inherently higher margins for Akanda and will therefore be key to its future goals.
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