Cronos Australia Makes ASX Debut

Cronos Australia has made its debut on the ASX under the ticker code CAU after raising AU$20 million from investors in an IPO last month.

The new firm is a 50/50 JV between Cronos Group Inc. and Australian private equity firm NewSouthern Capital, which is based in Melbourne. The aim is to become one of the leading medical cannabis and CBD wellness distributors in the Asia Pacific region.

Cronos Australia raised AU$20 million (US$13.8 million) from institutional and sophisticated investors in October after offering 40 million shares at AUD$0.50 each. That gave it an indicative market cap of around AU$64.4 million at the close of the offer.

Cronos is among the five largest cannabis companies in Canada and tobacco giant Altria controls a 45% stake in the business. Its holding in Cronos Australia has gone down to around 31% now that the company has gone public.

Cronos Australia will follow an asset-light model, with plans to outsource the cultivation of medicinal cannabis and manufacturing of products to licensed companies. Those products will include Cronos’ Peace Naturals brand, which is already sold in Canada and Germany.

It aims to use Australia as a regional hub to target the Asia Pacific medicinal cannabis sector. “Our asset-light business model, backing of Cronos Group and Asia-Pacific focus give the Company a unique proposition in our market,” said Rodney Cocks, chief executive at Cronos Australia.

Australia legalized medical cannabis in 2016 and a nascent industry is starting to take shape. The Australian Capital Territory, which houses capital city Canberra, also recently legalized recreational cannabis use, although that decision has proven to be controversial.

Aurora Cannabis has also made inroads into the fledgling Australian cannabis market, which looks likely to be competitive and saturated despite its small size. Yet it has potential to grow significantly in the years ahead and serve as a regional distribution hub.

Cronos Australia is licensed to import and export cannabis products. It is a small venture right now and it is unlikely to have any major impact on Cronos stock, but it is interesting to see the firm spreading its tentacles across the globe.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

Leave a Reply

avatar
  Subscribe  
Notify of