Emergence of World Leading Financial Market in the Cannabis Space
While cannabis companies predominantly focused on the Canadian market were the first to emerge in the financial market, we are now seeing US focused players accessing capital on Canadian markets. Liquor companies, beverage companies, tobacco and pharma companies have begun to think about how they can play in the cannabis space. Clarus remains deeply involved having brought two new companies public (totaling $102 million IPO values) and advised another on a $300 million M&A transaction.
And let’s not forget the gold mining market. Clarus raised funds for exploration related companies and played a major role in the annual Denver Gold forum hosting multiple events with a total of 12 companies and 15 money managers.
In total, some $523 million of value was raised or advised on.
What's Happening at Clarus...
While uncertainty continues to roil most segments of the market due to trade concerns, the passage of cannabis legislation in Canada removed the final legal uncertainty for this dynamic new industry. Capital market activity in the cannabis space was widespread in June and Clarus was once again one of the leaders raising or advising on $294 million in three transactions in June alone. We also continued to be active helping to raise $50 million for new and emerging businesses in modular construction and potentially the massive new LNG market; and $10 million for a new gold mining venture. Total capital raised was $354 million for the month. (6/29/2018)
Greater Volatility but Investment Themes Resonate
Markets have taken a more volatile turn resulting in more cautious and less committed trading activity. Clarus has been able to remain active in important investment themes with some highly targeted financings in the cannabis, blockchain, technology, specialty healthcare segments. M&A has emerged in the Gold sector as larger players are driven to enhance productions levels, meanwhile Clarus has been busy at the other end of the spectrum as it helps fund exploration and mine restarts. Through May 2018, we have participated in $717 million of financings of which $295 million were as lead or co-lead. Reflecting the growing needs of our clients, we were also involved as strategic advisors or offering fairness opinions on $641 million of transactions.
Recently we initiated on People Corp, one of Canada’s largest players in employee group benefit consulting and third-party benefits administration (PEO $6.90, TP $8.50). Liberty Health Sciences is also new coverage for us. Focused on the Florida medical cannabis industry as an integrated player offering growing through dispensary services. LHS has a strong early mover position in this potentially huge market (LHS $0.87, TP $2.00).
Remaining At the Centre of Key New Industries
The evolving market focus on cannabis related companies translated into several lead, co-lead and manager roles including two lead roles for Aphria Inc. raising over $200 million supporting its aggressive growth plans and a co-lead role for MedReleaf in its $100 transaction to also support a build-out of capacity. We also helped Liberty Health Services with its roll-out of production and dispensary services in the Florida medical market. In all, we raised over $350 million in 5 transactions for cannabis related companies in Q4/17 and early 2018.
As a continuation of our special situation coverage focusing in the US healthcare industry, we completed an IPO for Akumin Inc., an outpatient imaging centre consolidation story that has considerable opportunities for growth. Also in the special sit area we led a transaction for QYOU Media, a company accessing massive international markets with its curating and packaging of web content and newly evolving e-sport content.
Blockchain related companies also developed a following and Clarus nimbly participated in the space with its involvement with LeoNovus, a cloud solutions provider using blockchain technology, as well as having supported the growth of Global Blockchain Technologies Corp.
Traditional sectoral coverage also played a role as Clarus led two, co-led one and co-managed one transaction in the gold sector including one for a West African gold developer, two for US focused companies and one for a Canadian focused company.