Cannabis Watch: Another cannabis business development company is set to go public

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Altmore BDC Inc. on Wednesday set an estimate price range for its upcoming initial public offering as the second cannabis-focused business development company to move toward the public market this month.

McLean, Va.-based Altmore BDC will raise about $100 million based on the midpoint of its estimated price range of $14.50 to $15.50 per share, with 6.66 million shares offered in the IPO.

Ladenburg Thalmann, Compass Point and Oppenheimer & Co are underwriting the BDC, which will trade on the Nasdaq under the symbol ABDC, according to a filing.

Steven Ham, chairperson of Altmore’s board of directors, previously worked as chief financial officer of N12 Technologies Inc. and was a partner at Rainmaker Company. He’s been a manager at Altmore Capital, which will serve as Altmore BDC’s investment adviser and oversee its operations, since 2017. The BDC was founded in June of 2021.

“We intend to make loans to cannabis operators that are licensed in, and compliant with, state-regulated cannabis programs, as well as local laws and regulations…regardless of the status of the cannabis operators under U.S. federal law,” the company said.

Altmore BDC said it’s targeting private, middle-market cannabis companies with at least $15 million to $20 million of revenue, and $5 million-plus of earnings before interest, taxes, depreciation and amortization (Ebitda). It may also invest in operators with less than $15 million of revenue and $5 million of Ebitda, as well as in ancillary businesses. 

The BDC lists $114 million in senior loan investments as of Tuesday including a $16.7 million loan at a 15% total interest rate to Osiris Ventures Inc. of Santa Rosa, Calif. and a $15.9 million loan at 14% interest to March and Ash Inc. of San Diego.

Meanwhile, Silver Spike Investment Corp.
SSIC,
+0.13%

on Feb. 3 priced 6.1 million shares at $14 a share for proceeds of $85.4 million with underwriters Stifel, Piper Sandler, Canaccord Genuity and Cantor.

New York-based Silver Spike Investment said it closed its IPO on Tuesday. Shares rose 2 cents to $14.02 on Wednesday.

Silver Spike invests “across the cannabis ecosystem” in the form of direct loans to, and equity ownership of, privately held cannabis companies with Ebitda of $5 million to $50 million. The company’s typical investments will range from $5 million to $40 million.

“We have an active pipeline of investments and are currently reviewing over $1.1 billion of potential investments in varying stages of underwriting,” the company said in its IPO prospectus. 

Scott Gordon is chief executive officer and chairperson of Silver Spike Investment. He’s also the founder and CEO of Silver Spike Capital, an investment firm focused on the cannabis industry.

He previously co-founded Egg Rock Holdings LLC, the parent company of the Papa & Barkley family of cannabis products, with related subsidiary assets in manufacturing, processing, and logistics.

Gordon was also president of Fintech Advisory Inc., an investment manager for a multi-billion dollar family office fund, from 2016 to 2018. Earlier in his career, Mr. Gordon held leadership positions at Bank of America and ING Capital. Mr. Gordon Earlier in his career, he was a founding member of the emerging markets business at JPMorgan Chase & Co. in the 1980s.

The cannabis BDC IPOs come at a time that the Cannabis ETF
THCX,
+5.58%

has tumbled 39.4% over the past three months and the Renaissance IPO ETF
IPO,
+3.51%

has shed 28.5%, while the S&P 500 Index
SPX,
+1.29%

has slipped 2.3%.