OnMarket is receiving applications for the Cronos Australia Ltd IPO during the Exposure Period. More details here.
OnMarket has a limited allocation, and bids over $10,000 may be more heavily scaled back. The IPO may close early, and the Pay By date may change. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.
The IPO is fully underwritten by Lead Manager, Bell Potter.
Cronos Australia Ltd (ASX:CAU)* is a medicinal cannabis company that plans to enter the medicinal cannabis market in Australia with both THC and CBD cannabis products. Cronos Australia has secured all the necessary Australian licences to operate – including import and export licences. In addition to distributing the in-market brand PEACE NATURALS™, which is sold in Canada and Germany, Cronos Australia intends to also engage in product and brand development, outsourced manufacturing and distribution for Australia and target export markets in Asia (subject to legislative reform in those markets and Cronos Australia obtaining any required approvals and licences).
Cronos Australia was established as a 50/50 joint venture between a global cannabinoid company, Cronos Group Inc (dual listed – NASDAQ:CRON, TSX:CRON – with a market capitalisation of A$4.53 billion) and a Melbourne based private equity firm controlled by the two Executive Directors of Cronos Australia.
On 8 March 2019, Cronos Group Inc announced the closing of a C$2.4 billion strategic investment by Altria Group, Inc.
* subject to receipt of listing approval
Cronos Australia operates in the medicinal cannabis industry in Australia. Medicinal cannabis is a term that covers a broad range of products derived from the cannabis plant or the chemical compounds it produces, such as cannabinoids, that are used for the purposes of treating or alleviating the symptoms of a disease, ailment or injury. THC and CBD are the most abundant cannabinoids.
Cronos Australia was formed to take advantage of opportunities relating to the emerging cannabis industry both domestically and internationally. The vision of Cronos Australia is to become a leading health and wellness company in the Asia Pacific region through the distribution of premium cannabis products.
Cronos Australia’s business model is focused on the creation of shareholder value through a number of interdependent strategic priorities as detailed below:
Cronos Australia Business Model Overview
To achieve this, the business model is based on a number of strategic pillars that define the growth strategy of Cronos Australia, including:
Licences issued by the Office of Drug Control (ODC) pursuant to the Narcotic Drugs Act 1967 (Cth) (ND Act) serve to determine who may legally conduct an activity (such as importation), while permits issued by the ODC specifically control the activity (such as the type, quantity and timing of products that may be imported).
To date, five Federal Government licences have been granted to a subsidiary of Cronos Australia by the ODC, including:
A summary of the licences and expiration dates is provided in Section 3.3 of the prospectus.
Cronos Australia has a three-phase growth strategy*:
* The timeframes outlined for each phase are indicative and may change.
Cronos Australia has established a number of key relationships that will assist in the execution of its business model:
Cronos Australia is looking to issue up to 40,000,000 shares at an issue price of $0.50 to raise A$20 million (before expenses). The Offer is fully underwritten by the Lead Manager, Bell Potter Securities Ltd.
The company proposes to use the funds raised from the offer for:
Shane Tanner – Independent Non-Executive Chairman
Shane is currently the Chairman of Paragon Care Limited (ASX:PGC) and Rhythm Biosciences Limited (ASX:RHY) and he is an Independent Non-Executive Director of Victory Offices Limited (ASX:VOL). Shane also has significant strategy and transaction experience through the Mayne Group via the IPO of the telecommunications company, Optus Communications. Shane holds Business and Finance qualifications from RMIT University and Swinburne University of Technology.
Rodney Cocks – Executive Director and Chief Executive Officer
Rodney is a Director of NewSouthern Capital, a private equity firm he co-founded which undertakes business in the real estate, energy and digital sectors. Prior to Cronos Australia, he was on the Senior Leadership Team at Linfox and was a Consultant at the Boston Consulting Group. Rodney also served on the Counter Narcotics Team of the British Embassy in Kabul, Afghanistan and with the United Nations in Afghanistan, Sri Lanka, Pakistan and Iraq. Army. Rodney holds a BComm from the University of Melbourne, LLB from the Queensland University of Technology, MBA from the Wharton School, University of Pennsylvania, MPA from the Harvard Kennedy School, Harvard University and is a Graduate of the Australian Institute of Company Directors and the Royal Military College, Duntroon.
Peter Righetti – Executive Director and Chief Operating Officer
Peter is a Director of NewSouthern Capital, a private equity firm he co-founded which undertakes business in the real estate, energy and digital sectors. Prior to NewSouthern Capital, he held senior commercial and leadership positions with private development and construction organisations. He was part of the executive team at ASX listed, Engenco Limited (ASX:EGN) and held senior development and project roles at construction companies including Metricon Group. Peter served as an Engineer Officer in the Australian Army.
He holds a BComm from Deakin University, LLB from the University of New England and is completing an LLM at the University of Melbourne.
Anna Burke AO – Independent Non-Executive Director
Anna served in the Australian Federal Parliament as the Member for Chisholm in the House of Representatives from 1998 to 2016, and was also the 28th Speaker of the Australian House of Representatives. Anna is also a full-time Member at the Administrative Appeal Tribunal. She also had extensive Committee service in the Federal Parliament, including Joint Statutory Committee on Corporations and Financial Services and House of Representatives Standing Committee on Economic, Finance and Public Administration. Anna holds a BA (Hons) and MComm (Hons) from the University of Melbourne. Anna was appointed as an Officer of the Order of Australia in January 2019.
Michael Gorenstein – Non-Executive Director
Michael Gorenstein is a Non-Executive Director of Cronos Australia. Mike is the Chairman, President and Chief Executive Officer of Cronos Group Inc (NASDAQ: CRON, TSX: CRON). Mike is also a co-founder and Member of Gotham Green Partners (Gotham Green). Before joining Cronos Group Inc, Mike was the VP and General Counsel at Alphabet Partners, LP, a New York City based multi-strategy investment management firm, focused on identifying mispriced assets across various industries, asset classes and geographies. Mike graduated from the University of Pennsylvania Law School with a JD, the Wharton School at University of Pennsylvania.
Jason Adler – Non-Executive Director
Jason Adler is a Director of Cronos Group Inc (NASDAQ: CRON, TSX: CRON), the co-founder and Managing Member of Gotham Green, a private equity firm focused primarily on early-stage investing in companies in the cannabis industry. Prior to co-founding Gotham Green, Jason was the co-founder and Chief Executive Officer of Alphabet Partners, LP, a New York City based multi-strategy investment management firm, focused on identifying mispriced assets across various industries, asset classes and geographies. Jason also founded Geronimo, LLC, a broker dealer and member of the American Stock Exchange, that made markets in equity options, and he began his career as a Market Maker at G&D Trading. Jason graduated with a B.A. from the University of Rhode Island.
Lior Harel – General Counsel and Company Secretary
Lior Harel is the General Counsel and Company Secretary of Cronos Australia. Prior to Cronos Australia he was the Chief Legal Counsel of SEEK.com.au (ASX:SEK) with coverage of SEEK’s Australian and Asian businesses. Prior to SEEK, Lior was the Chief Operating Officer and General Counsel of ecommerce and travel business, The Lux Group (cudo.com.au, luxuryescapes.com, deals.com.au). He commenced his career at leading Australian commercial law firm, Arnold Bloch Leibler, rising to Senior Associate in the Corporate/Commercial and Banking and Finance teams. Lior holds an LLB and a BA from the University of Melbourne.
Thomas Howitt – Chief Financial Officer
Thomas Howitt is the Chief Financial Officer of Cronos Australia. Prior to Cronos Australia he was the Chief Financial Officer of Global Kinetics Corporation a pre-IPO life sciences company, Chief Financial Officer and Company Secretary of Simavita (ASX:SVA, TSX-V:SV) a digital healthcare company, Chief Financial Officer and Company Secretary of Genetic Technologies Limited (ASX:GTG, NASDAQ:GENE) a genetic testing company, Chief Financial Officer and Company Secretary of Intermoco Limited (formerly ASX:INT) a remote monitoring and control company, Chief Financial Officer and Company Secretary of Lowell Capital a privately held investment banking group and Manager at EY. Thomas holds a BComm from the University of Western Australia.
An investment in Cronos Australia is subject to a range of risks including but not limited to failure to maintain required licences, changes in law, growth prospects, supply chain interruption, access to IP and early stage risk. For more information read Section 6 of the Prospectus. These risks should be considered in detail.
OnMarket is receiving applications for the Cronos Australia Ltd IPO during the Exposure Period. Applications will be not be processed until the completion of the Exposure Period and no preference will be conferred on applications received during the exposure period.
If a replacement or supplementary prospectus is issued, this will be provided to you along with the opportunity to withdraw your application.
Section 734(6) disclosure: The issuer of the securities is Cronos Australia Limited ACN 629 071 594. The securities to be issued are ordinary shares. The disclosure document for the offer can be obtained by clicking on the link above. The offers of the securities are made in, or accompanied by, a copy of the disclosure document. Investors should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document (which can be done via the electronic application form which will become available by clicking the bid button above).
OnMarket has a limited allocation. The offer may close early and the 'Pay By' dates may change. Bids over $5,000 may be scaled back more heavily. Duplicate bids under the same investment profile, investor name or residential address may be cancelled.
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The Cronos Australia Ltd IPO has closed for applications via OnMarket. Applications must be funded by 16 October, at 5pm
Cronos Australia Ltd (ASX:CAU) was formed to take advantage of opportunities relating to the emerging medicinal cannabis industry both domestically and in the Asia Pacific region. Having secured all the necessary Australian licences to operate – including import and export licences, Cronos Australia’s vision is to become a leading health and wellness company in the Asia Pacific region through the distribution of premium cannabis products.
Cronos Australia was established as a joint venture with global cannabinoid company, Cronos Group Inc (market cap. of approx. A$4.53bn). Under a licence agreement with Cronos Group Inc, Cronos Australia has access to certain intellectual property, know-how, and trademarks.
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