Cilo Cybin, the first and so far only South African company with a license to cultivate, process and package cannabis, is seeking a JSE listing as a Special Purpose Acquisition Company (SPAC), the first in five years.
The original IPO opening date was for May, but it is now Monday, September 12, and Cilo Cybin hopes to start trading on November 14.
In a statement from Sens on Friday, September 9, the company said it was aiming to raise a minimum of R500 million and up to R1.9 billion with the initial public offering (IPO) if “demand investors justified it”.
“Industries Cilo Cybin plans to participate in include biotechnology, cannabis, psychedelics, wearable devices and personalized nutrition, subject to regulatory approvals if required,” the company said. “The company has identified potential acquisition opportunities for several assets located in South Africa and the United States of America.”
A SPAC listing aims to raise capital for acquisitions. This requires an “empty ship” with no financial or profit history. Thus, the SPAC listing will be the holding company of Cilo Cybin.
“We want to go public because we want to raise funds for the rest of the business, not necessarily the cannabis side. And the fastest way to do that is through a SPAC. So what we’re doing is we want to raise R500 million to R2 billion through our SPAC. And that goes into our holding,” said Cilo Cybin president Gabriel Theron. business maverick recently at the company’s state-of-the-art manufacturing facility in Midrand.
“We want public participation, not just big players,” Theron said.
Lack of public participation is one of the reasons that new listings on the JSE have all but dried up, with new SPAC listings being as rare as chicken teeth. According to the JSE, the last SPAC list was for RH Bophelo in 2017.
“A SPAC is used to raise primary capital for a front company with the promise of leaving and making acquisitions. But the problem is that you cannot raise primary capital on the JSE. So the whole concept of a SPAC is stillborn,” Paul Miller, principal of consultancy AmaranthCX and a frequent critic of SA’s savings and investment industry in these pages, said business maverick.
“The problem is that large institutions will only invest in large liquid companies and by definition a SPAC is a small company. A SPAC is about raising primary capital and it goes one step further – it is about raising primary capital for a shell and the management team promises that they will go out and find a business to buy,” he said. declared.
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Go high tech
There is a stereotype that cannabis cultivation is a small-scale peasant activity and that is certainly the case in much of Africa. But Cilo Cybin is high-tech and is also about CBD and other cannabis-related products.
“Cilo Cybin combines biohacking, biotechnology and pharmaceutical methodologies to provide a holistic and individualized solution that allows our customers to gain insight into their health, performance and longevity that they have never had before”, this is how the company describes itself on its website.
Its CBD products come in vape oil, liquids and other forms, and are designed to treat pain or sleep issues or to relax and relieve anxiety. There is a CBD gel for external use for muscle or joint pain. There are also various supplements and even devices such as the brain gaugewhich claims to measure changes in brain function.
business maverick donned a lab coat and even a hairnet — which was pretty funny in this correspondent’s case — to tour some of the facilities. Everything from growing to injecting fluids into vaping devices is highly automated. It’s high-tech and capital-intensive, but not labour-intensive – the Fourth Industrial Revolution will not solve South Africa’s unemployment crisis.
The company also wants to move away from cannabis cultivation (there are over 50 licensed growers in South Africa) and move fully into the production and distribution of its product range.
A legal, recreational and taxable cannabis trade involving THC products – the kind that get you stoned – remains far away in South Africa, where policy-making remains shrouded in a cloud of smoke. Countries like Canada have clearly taken the lead on this front.
But a cannabis listing would signal that the cannabis economy is gaining momentum. And the JSE could surely do with another list or two these days. DM/BM