CANNABIS shares will be traded for the first time in the 320-year history of the London Stock Exchange today – a milestone event for the UK and European industry.
MGC Pharmaceuticals‘ (LSE: MXC) stock price is excepted to rise (see here) after its pre-market placement was markedly oversubscribed.
The company’s 441m shares were placed at £0.01475 – giving it a value of £6.5m. The two dozen-or-so initial investors were chosen from scores who offered more than £10m.
Speaking to BusinessCann, Roby Zomer, Co-Founder and Managing Director, said: “We are aware we are the first, that was our target and we have worked hard over the last 18 months to achieve that.
Opening The Door
“It’s a great achievement and there will be many more. We are now opening the door for the others to follow. We have undertaken the initial work and established the benchmarks to define what is required to be listed. This is one of the biggest markets in the world and it should be open to cannabis companies.”
He thanked stockbrokers Turner Pope for attracting strong interest from a range of institutional funds and High Net Worth individuals. He said: ”We wanted £5m, we got over £10 and then narrowed that down to £6.5m. There was a big appetite in the market.”
MGC Pharmaceuticals was supported by London-based commercial law firm Memery Crystal. Its CEO Nick Davis has been pushing for medical cannabis firms to have access to the market for some time.
He said: “There has been a lot of hard work getting here. It started two years ago and we have had our bumps along the way, but happily we have now got the green light for good-quality, legal companies to access the markets.
“This is happening now, and it is a hugely proud moment for all of us who have been involved. MGC is a very ambitious company.”
More Companies To Follow
Looking ahead Mr Davis says there are few SPACs looking to the LSE and a number of high-quality medical cannabis businesses, and others in the CBD space.
Next Wednesday Kanabo Research will list on the LSE in a reverse takeover by Spinnaker Opportunities; its Chairman Andy Morrison says there may be as many as 10 by the end of the year.
MGC Pharma is a bio-pharma company specialising in the production and development of cannabinoid medicines. It is also listed on The Australian Securities Exchange with a market capitalisation of over £30m
Its Australian share price rose on the LSE announcement, last week, and last night was trading at a 10% premium to the UK price with these expected to align in time.
Mr Zomer says it may well be returning to the market for additional cash before the end of the year as it drives forward an ambitious agenda which includes a non-cannabis treatment for Covid-19; ArtemiC.
It will also be looking at possible acquisitions and boosting its existing revenues of £1.2m by increasing its market share, product lines and distribution in Brazil, UK, Australia and elsewhere.
Its product portfolio includes CannEpil a treatment for refractory epilepsy and CogniCann for helping in the fight against dementia.
Also into product pipeline are; InCann, for the treatment of Crohn’s disease and colitis; Tetrinol, for muscle-wasting disease cachexia, and anti-inflammatory medicine TopiCann.
He says it will be looking to looking to launch two new products into the market every two years.
The UK’s Financial Conduct Authority (FCA) changed its position on the listing of medical cannabis companies and CBD businesses last year after previously determining they fell foul of the UK Proceeds Of Crime Act.
BusinessCann reported how Mr Davis and Mr Zomer fought a long battle with the FCA. The rules still prevent North American cannabis companies from LSE listings.
Companies with any connections to the cannabis recreational market are still illegal in the UK.
Mr Davis added: “Many investors have been waiting patiently for access to medical cannabis businesses and there were some really high-quality institutional investors on the ticket.
“This listing and the impending debut of Kanabo show the compliance departments have clearly done their work and are now comfortable to invest in cannabis.”
Turner Pope secured support from several UK fund managers including Premier Milton and Chelverton Asset Management.
Cannabis is projected to be one of the growth industries of the decade driven by increasing liberalisation in North America and a growing awareness of its medical benefits.
LONDON STOCK EXCHANGE
The London Stock Exchange has a total market value of over £4 trillion – more than twice the GDP of the UK economy. It currently lists over 2,500 companies from over 60 countries and on its seven markets which include the FTSE 100 and AIM All-Share index.
One CBD company is currently listed on the LSE; Zoetic International. It had initially been listed as Highlands Natural Resources, with a focus on US oil and gas before migrating into cannabis.
UK cannabis companies such as Ananda Development are listed on the junior Aquis Exchange where regulators are amenable to cannabis businesses.