RBC set for first cannabis equity financing with CannTrust share sale

RBC set for first cannabis equity financing with CannTrust share sale

- in Investing

Fresh off advising on the cannabis deal initially, Royal Bank of Canada is actually set to join in its first-ever share sale by way of pot producer.

The bank’s investment-banking division, RBC Capital Markets, are going to be one of several lead bookrunners with a US$200-million public stock offering by Vaughan, Ont.-based CannTrust Holdings Inc., that is announced on Monday.

Citigroup Inc., Bank of the usa Corp.’s BofA Merrill Lynch and Credit Suisse Group AG’s Credit Suisse Securities (USA) LLC will likely co-lead the offer.

RBC declined to touch upon the transaction but confirmed the bookrunning gig was once it offers took part in an equity financing within the cannabis sector.

The bank marked another first in March, if this was announced RBC Capital Markets was becoming “exclusive” financial advisor to pot producer Newstrike Brands Ltd., whatever target of the $263-million acquisition by HEXO Corp.

Major finance companies have been cautious in terms of cannabis, which can be legal in Canada whilst still being federally illegal in the United States.

In the meantime, the marijuana sector continues to be largely served by smaller independent investment firms, although Canadian lenders just like Bank of Montreal and Canadian Imperial Bank of Commerce have provided financing for any industry.

RBC signalled it might start making marijuana-related moves late a year ago, together with the head of their capital-markets arm telling Bloomberg News your budget might be “selective in this approach.”

The bank has also a substantial U.S. footprint, which CannTrust said factored into its decision-making.

CannTrust’s financing has done simultaneously in Canada and the United states of america, a prospectus supplement showed. The business is listed for the brand new York Stock market plus the Toronto Stock trading game.

“CannTrust selected BofA Merrill Lynch, Citigroup, Credit Suisse Securites (USA) LLC and RBC Capital Markets to behave as lead bookrunning managers for that offering to distribution inside U.S. because clients are a recently listed issuer in the market,” the firm said inside an email.

Also serving as bookrunning managers about the CannTrust deal are Jefferies LLC and Canaccord Genuity LLC, the release said.

There isn\’t guarantee “as to if or when” the offering could possibly be completed or its actual size and terms, the release said. You can find conditions attached to its completion also, including any required approvals from stock exchanges.

Approximately 85 % within the shares offered could come from CannTrust with 15 per-cent to be had by certain shareholders.

“The provider means to use the net proceeds within the offering for general corporate purposes, including cultivation and facility expansion, expanded outdoor growing, international expansion, enhanced extraction capacity, upgrades for GMP Certification and biosynthesis development,” it added.

CannTrust runs a Niagara-area harvesting facility in Pelham, Ont. and packages products with a Greater Toronto Area manufacturing centre in Vaughan. Its CEO is Peter Aceto, ad units head of Tangerine Bank, which is properties of Scotiabank.

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