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Akanda Corp. shares rocketed in their trading debut on the Nasdaq on Tuesday less than a year after the cannabis company was formed.
London-based Akanda Corp.
AKAN,
a pre-revenue company focused on legal cannabis in the U.K. and Western Europe, priced 4 million common shares at $4 per share for proceeds of $16 million in a deal led by sole underwriter Boustead Securities LLC.
The stock traded as high as $31, before falling back to $12.27 a share in afternoon trades.
CEO Tej Virk said the interest around the IPO stems partly from Akanda as a “scarcity play” as the first Nasdaq-listed cannabis company with European distribution and a production facility in the Kingdom of Lesotho.
“We cultivate and process natural cannabis at our facilities in the Kingdom of Lesotho, Africa and intend to supply medicinal-grade cannabis biomass, cannabis flower and cannabis concentrates to wholesalers in international markets,” the company says in its IPO filing documents.
“We also import and sell medical cannabis-based products to the domestic market in the United Kingdom.”
While the stock market has been volatile and Akanda postponed its IPO for about three weeks, interest in the stock remains healthy because of the company’s focus on Europe, he said.
Demand for product continues to increase as Germany takes steps to legalize adult-use cannabis and medical programs around the region expand, he said.
Virk, a former Canopy Growth
CGC,
WEED,
executive, took the reins of the company last year when it was formed from two international units of U.S. cannabis company Halo Collective Inc.
HCANF,
Shares of Halo collective jumped 33 cents to 72 cents a share on Tuesday.
Akanda is now an independent company with Halo Collective retaining a minority stake.
“We’ve been crisis-jumping from COVID-19 to the war in Ukraine,” Virk said. “Cannabis has been shown to be effective in treating post traumatic stress disorder (PTSD). We need to be out there to serve those end markets.”
Proceeds of the deal will be used for property, plant and equipment, as well as working capital and the catchall general corporate purposes. The company plans to construct greenhouses at a cost of $3.5 million, an EU GMP post-harvest drying facility estimated at $1.5 million and an EU GMP extraction facility at a cost of about $2 million, according to the filing documents.
Virk said another appeal of the company is its nine-member board of directors, five of whom are women.
See Also: Women and minorities are losing ground in cannabis company executive ranks, study finds
The company’s board includes Akanda executive director Louisa Mojela, who is group CEO of of Wiphold (Women Investment Portfolio Holdings), an African-based ESG fund to empower black African women, which she co-founded in 1994. It also includes Aslihan Akkar-Schenkl, former managing director of cannabinoid medicine company Northern Green Global GmbH.
Gila Jones, an independent director of Akanda, is currently the chief operating officer of Westbrook Global Inc., a media company founded by Will and Jada Pinkett-Smith.
With 29.5 million common shares outstanding if the underwriters exercise the over-allotment option in full, Akanda’s market cap was about $118 million at its $4 IPO price. At $12.27 a share, the company’s market cap is about $362 million.
The Cannabis ETF
THCX,
has fallen 26% in the year to date, while the AdvisorShares Pure US Cannabis ETF
MSOS,
has fallen 30% and the S&P 500
SPX,
has gained 5%.
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