Africa’s first cannabis-focused blank-cheque company is set to list later this year with a view to buying companies in the fledgling industry alongside genetics and wearable health-device companies in the US and South Africa.
Gabriel Theron, the founder of South Africa’s Cilo Cybin Pharmaceutical Ltd., aims to sell shares in a special purpose acquisition company in Johannesburg in May and raise a minimum of R500 million, he said in an interview. The entrepreneur will then use the vehicle to buy Cilo Cybin, which he values at as much as R300 million, followed by non-cannabis health companies in South Africa and the US, he said.
Cilo Cybin can’t be listed directly as it doesn’t have a long enough earnings track record to qualify, Theron said. The chief executive officer said last year he planned an initial public offering of the company within 12 months.
"We don’t have time to wait to acquire the American assets," he said, referring to the US companies the special purpose acquisition vehicle (SPAC) will target. "I want to be publicly trading by the third quarter of this year. That's my line in the sand."
SPACs raised $160 billion around the world last year but are relatively rare in Africa.
While US SPACs are required not to have a particular target in mind when they list, the rules in South Africa are different, according to Theron. The Johannesburg Stock Exchange didn’t immediately reply to queries.
Cilo Cybin, named after the psychoactive substance in magic mushrooms, uses a strong South African cannabis variety called Durban Poison, which has high levels of tetrahydrocannabinol, or THC, the main psychoactive chemical in marijuana plants.
Its products that don’t require a prescription will initially be sold by the Arrie Nel Pharmacy Group, which has over 90 outlets, while medicines that contain THC will need to be recommended to Aids and cancer patients by medical professionals.
The firm is the first in South Africa to win the right to grow, process and package cannabis products. It’s also able to sell the products globally, making the licenses more valuable, Theron said.
"We know the investors, we know the funds, we have the hype here," he said of his decision to list in Johannesburg. A secondary sale on the Nasdaq is a possibility, he added.
Theron will hold a 5% stake in the SPAC, 20% will be sold to the public and the balance will be made available to asset managers, he said.