Two events doth not make a trend but it’s still interesting to see the following.
Anybody who’s been following the Australian sector will have been aware of the Chinese gaining control of Tasmanian Botanics in the past month.
Yes they grow a lot of hemp for industrial use in China as well as exporing but it’ll be a long time yet before China integrates cannabis into its health system.
That said Beijing has let Yongji Health do this
Now we learn that Malaysian investor Lim Kuang Sia has taken a 12.48% beneficial interest in South African cannabis company Cilo Cybin.
The Malaysians have quietly been assessing medical cannabis for the last 5 years and i suggest they’ve been waiting to see how the experiment to the north plays out before they make any decisions on anything.
Key details of the transaction include:
The Deal: Lim Kuang Sia, who is the founder, CEO, and managing director of the major rubber glove manufacturer Kossan Rubber Industries, acquired the stake from Tham Seng Kong (CEO of Nasdaq-listed Malaysian biotech firm ALPS) for approximately R22 million.
Ownership Impact: The sale reduces Tham’s personal holding in Cilo Cybin from 17% to 7%. However, his company, ALPS, continues to maintain its own separate 10% interest in the South African firm.
Company Status: Cilo Cybin, founded by CEO Gabriel Theron, was the first South African company to secure rights to grow, process, and package cannabis goods. Following a reverse takeover of its main processing facility, the company officially migrated to the JSE main board.
Let’s also remember this is a conversation that has been in play since 2023. Cannabis Culture reported the following in May of that year and it looks as though the company have shown all the naysayers to be wrong which must be satisfying.
Cilo Cybn, a South African medical cannabis startup flopped with their first attempt to become Africa’s first cannabis Special Acquisition Vehicle (SPAC). Now, they are trying again and observers want to know what has changed.
The Goa last year was to raise $116mn. Cilo raised less than 1% of that, $1.078mn, leading Gabriel Theron, the startup’s founder to admit, “We have determined it is in the best interest of the company to focus on its growth initiatives, and thus to postpone listing to a later date.”
In April 2023, it is trying again after reportedly finding a Malaysian backer, the firm ALPS Global Holding Bhd. As a majority shareholder, ALPS Global will drive Cilo Cybn’s SPAC, and attempt a listing on the Johannesburg Alternative Securities Exchange in mid-2023.
“Cilo Cybn second attempt to create a SPAC can be doomed to failure again if the domestic investors don’t come to party,” Dikeledi Matla chairperson of the Soweto Cannabis Alliance Forum, a South African lobby for Black cannabis cultivators, says, arguing that “It’s too soon for Cilo Cybn to try again.”
Though Cilo Cybn has found a Malaysian financier who looks significantly well-resourced, the most important factor is for South Africa’s domestic investors, large corporates and small, to snap up shares in Cilo Cybn, and thus strengthen its liquidity or working capital when it hopefully lists, adds Matla.
“On the Johannesburg Stocks Exchange and other securities exchange, there is still enormous stigma towards cannabis investments vehicles. Capital is frightened by the legal ambiguities surrounding cannabis in South Africa,” says Matla, citing the example of another high-profile South African cannabis corporation, Labat Africa whose stock took a catastrophic fall in 2022 and ended the year at 10 South African cents after debuting at 30 cents.
Cilo Cybn is ‘too ambitious’ and ‘poorly defined’ in terms of its core cannabis strategy (it hypes itself as a cannabis cultivator and dabble in cannabis mushrooms psychedelics ) and this probably puts off some potential investors, feels Sicelo Nyoka, now an independent cannabis markets analyst and former economist at the South Africa industry and commerce ministry where he used to assess finance profiles of foreign cannabis corporation applying for business licenses in South Africa.
“It would be better if Cilo Cybn defines itself clearly whether it’s a straight cannabis cultivation to export player or a cannabis bio-pharmaceutical startup wishing to develop medicines for commercial sale. Now it’s unclear and investors don’t like those grey, undefined ambitions,” Nyoka says.
Last month on 19 April, ALPS Global chief executive officer and founder, Tham Seng Kong, defined its ambition in setting up Cilo Cybn for another SPAC listing as: “Our interest in Cilo Cybin is the potential for future drug development that can be produced for diseases such as Parkinson’s. Cannabis is only the beginning.”
For Nyoka, the market analyst, that sounds like “more confusion to potential shareholders. Is Cilo Cybn an experimental cannabis drug-maker or cannabis cultivator?”
Will we see a Singaporean or Indonesian investor enter the fray next.