U.S. cannabis firm Curaleaf falls in Canada trading debut
TORONTO (Reuters) - U.S. cannabis retailer Curaleaf Holdings Inc CURA.CD opened lower in its trading debut in Toronto on Monday after amassing $400 million in the biggest equity raising in Canada’s marijuana industry.
Curaleaf opened at C$8.70 on the Canadian Securities Exchange (CSE), compared with the offer price of C$11.45, which was near the top end of a previously disclosed range of C$8.56 to C$11.47 per security.
It was trading 17.1 percent higher at C$10.19 at 10:26 a.m. ET, compared with a 0.75 percent gain in the Toronto stock benchmark .GSPTSE and a 0.8 percent fall in the Horizons Marijuana Life Sciences Index ETF (HMMJ.TO).
“We were quite surprised by the demand and attention that our roadshows got,” Boris Jordan, executive chairman of the Wakefield, Massachusetts-based company, told Reuters. “Being one of the larger players in the U.S., there was a lot of attraction in investing in a company that has a multi-state footprint.”
The cannabis industry saw a flurry of capital raisings, acquisitions and other deals ahead of the legalization of recreational marijuana in Canada on Oct. 17.
After a rally in the run-up to legalization, shares of Canadian cannabis companies have retreated on profit-taking and concerns about valuations.
Even so, Curaleaf raised almost three times its intended $150 million offering, giving it a market value of about $4 billion in the biggest-ever reverse takeover on the CSE.
Reverse takeovers allow companies to go public by rolling into listed shell corporations.
The raising attracted more than 100 institutional investors, the company said in a release on Monday.
Those institutions accounted for 90 percent of demand, split between the U.S., Canada and Europe, Jordan said.
Curaleaf owned 28 dispensaries, 12 cultivation and 9 processing sites in 12 U.S. states as of Sept. 7, according to an investor presentation.
It plans to grow to 41 stores by year end, and to over 69 by the end of 2020, with cultivation expanding to supply those stores, Jordan said.
Reporting By Nichola Saminather; Editing by Susan Thomas
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