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Speculation grows for Harvest IPO: Reuters
Posted on Friday, 09 November 2018 11:57
Harvest Enterprises, a US-based cannabis retailer – which recently expanded its presence into California – is close to agreeing terms of its initial public offering (IPO) that is expected to take place next week, sources told Reuters.
According to the people with inside knowledge of the situation, the group is set to raise USD 230.00 million in a deal that could value the business at USD 1.50 billion.
The flotation comes amid a surge of investment, capital raises and acquisitions in the global marijuana market as more countries begin to legalise the medical use of the drug, while Canada is a step ahead of the crowd recently signing off a regulation to allow sales of the products recreationally.
Headquartered in Arizona, Harvest had initially thought it would raise USD 50.00 million through the listing but has increased the offer to USD 230.00 million due to increased demand, the insiders noted.
In a confidential investor presentation seen by Reuters, it said Harvest is expecting to have 16 stores by the end of 2018 and 50 by the end of 2019, up from its current nine locations.
The group is predicted to generate earnings before interest, taxes, depreciation and amortisation (EBITDA) of USD 226.00 million, on revenue of USD 559.00 million in 2020, with the IPO due to value the firm at 6.7x the projected EBITDA for 2020.
Some sources told Reuters that there is an additional deal, set to be priced at USD 6.55 per subscription receipt, expected to complete by the end of this week.
Buyers will then be able to switch their holding for shares when the company goes public in the next seven days, the people said.
Harvest is planning to list on the Canadian Stock Exchange via a reverse takeover, with chief executive Steven White telling Reuters that interest is high.
When contacted by the news provider, a representative for the group declined to comment on the terms of the IPO, while the sources asked not to be named as the matter is private.
In the company’s main market – the US – it is still illegal to sell cannabis products under federal law; however, this does not stop it from being one of the largest for sales of marijuana in the world.
Reuters cited Arcview Market Research and BDS Analytics as saying the country is expected to account for over three-quarters of global legal sales of the drug over the next three years.
Due to the laws in the US, a number of cannabis growers have chosen to go public in Canada in a bid to fund growth and gain access to capital.
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