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CiiTECH Raises Over £2m Ahead Of Its £17.5m London Stock Exchange Debut

CANNABIS company CiiTECH has completed a £2.1m capital raise via an issue of convertible loan notes ahead of its debut on the London Stock Exchange through a reverse takeover (RTO).

Company founder and CEO Clifton Flack said the capital will be used to fund the RTO and support business activities including marketing, recruitment and operations – effectively ‘supercharging’ its growth. 

Under the reverse takeover plans LSE’s Fragrant Prosperity Holdings (LON:FPP) has agreed to acquire CiiTECH for £17.5m through the issue of shares at a price of 5.25p each.

With revenues of £7m to date over its four-year existence CiiTECH touts itself as one of the ‘grown-ups in the cannabis space’.

One Of The Grown-Ups

Mr Flack told BusinessCann that when the opportunity to go public arose in early February he took little convincing.

Clifton Flack

“We were looking to raise capital to support our growth back in February and as the first cannabis companies debuted on the LSE every conversation turned from a private fund-raise to ‘are you going public?”

He says that whilst all of this year’s LSE cannabis crop are ‘start-ups’ he believes it has ‘a grown-up case to be a public company’.

“What we have witnessed in the UK public markets this year with cannabis has been something of a Canadian-style frenzy.

“But, as a business we have been trading for over four years with decent revenues – over £7m in that time – and not many of this year’s cannabis market debutants can demonstrate that sort of track record.

“We have a stable of high-quality brands; we are in numerous territories and we have a growing a number of business development opportunities.” 

Three Established Ranges

London-born Mr Flack established CiiTECH which now has three CBD ranges: Provacan, Hugg and Impact and it recently branched out into medical cannabis.

FPP is a Virgin Islands-based acquisition vehicle established by Craig Marshak and James Retter. Its shares have been suspended on the LSE pending the completion of the RTO. Investment banker Mr Marshak is also Managing Director of Clear Think Capital.

London-based corporate finance and investment house Chrystal Capital Partners acted as financial adviser to CiiTECH. 

Tristan Gervais, Head of Chrystal Capital Cannabis Advisory, said: “We are delighted to have advised CiiTECH on its successful fundraise and on finding an excellent partner in Fragrant Prosperity. Our unique cannabis sector expertise, together with our extensive relationships with cannabis investors, continues to deliver much-needed growth capital and M&A solutions to this exciting, fast growing industry.”

CiiTECH Group Limited

Alongside professional family offices and ultra-high-net-worth individuals AIM-listed UK investment vehicle Fast Forward Innovations took £175,000 of the CLN issue through its existing cash resources.

Its CEO Ed McDermott said: “CiiTECH is an established company with an outstanding reputation as a consumer facing brand-builder while being dedicated to medical cannabis research.” 

The CLNs will convert into ordinary shares upon completion of the acquisition of CiiTECH’s existing issued share capital. CiiTECH will list on the Standard Segment of the Official List on the Main Market of the London Stock Exchange and will be known as CiiTECH Group Limited. The RTO is expected to be completed in September.

Mr Flack added: “We are pleased with the strong interest in this fundraise, which enables us to continue implementing our aggressive growth strategy. We are grateful to all investors supporting our fundraising efforts and look forward to completing the RTO of FPP and becoming a listed business. 

“Our Science-led approach focuses on identifying clear product needs in our chosen territories and then sourcing solutions for these new markets.”

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