Private equity-backed Canadian medical marijuana company Tilray Inc rose more than 35 percent in its U.S. trading debut on Thursday after raising about US$153 million ($202 million) in an initial public offering.
Shares of the company, the third Canadian cannabis company to list on a major U.S. exchange, opened at US$23.05, compared with its IPO price of US$17 per share, and by late morning the stock was trading at US$21.08. The Nasdaq Composite Index .IXIC was down 0.4 percent.
Tilray’s debut values the company at about US$2 billion ($2.6 billion), and the deal was marketed in a range of US$14 to US$16 per share. It intends to use the proceeds to pay down debt and expand facilities in Canada and Portugal, it said in its IPO prospectus filed July 9.
Seattle-based cannabis private equity firm Privateer Holdings will continue to own 82 percent of Tilray.
Tilray, a cannabis cultivator, processor and distributor, has pursued a public listing at a time when many Canadian weed producers have come off their peaks.
Cronos Group Inc has dropped 18 percent since its debut in February on the Nasdaq and Canopy Growth Corp is down nearly 15 percent since it started trading on the New York Stock Exchange in May.
Recreational use of cannabis will be legal in Canada from October and investors have piled on to Canadian weed stocks in anticipation. But some of the exuberance has worn off on high valuations and strict rules on labeling and branding.
Tilray sells marijuana to patients in countries including Canada, Australia and Germany through agreements with pharmaceutical companies. It also has production facilities in Canada and Portugal.
Cronos and Canopy have their primary listings in Toronto, while Tilray will only trade in New York.
Update: Based in Nanaimo, British Columbia, Tilray earlier in 2018 closed a $60 million Series A financing backed by unidentified institutional investors.
The company has been owned and funded by Privateer since its founding in 2014.
(Reporting by Danya Hajjaji; Addutitional reporting by Nichola Saminather; Editing by Susan Thomas; Editing by Susan Thomas)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)