TORONTO (Reuters) - Cannabis investor Canopy Rivers Inc, the venture arm of industry giant Canopy Growth Corp went public on Thursday in a debut that gave it a market capitalization of about C$1.6 billion ($1.24 billion), more than double its valuation prior to the listing.
Canopy Rivers listed on the Canada’s junior stock exchange through a reverse takeover of a shell company, a route preferred by the cannabis industry to tap the capital markets.
It is the latest in a string of public offerings of mostly Canadian cannabis companies seeking to profit from the imminent legalization of recreational weed in October and a raft of medical marijuana approvals around the globe.
The stock ended the day at C$8.75 on the TSX Venture exchange. The public offering was oversubscribed by more than three times, a source familiar with the situation said, declining to be identified as the information is not public.
The cannabis sector has witnessed frenzied activity that has sent valuations of the fledgling industry soaring.
Canopy Rivers has made about a dozen Canadian and international investments, which include licensed producers, pharmaceutical formulators and retail networks, according to its website.
The company allows investors to target a diversified basket of cannabis companies across a range of geographies.
The transaction was led by Canadian Imperial Bank of Commerce and GMP Securities L.P.. CIBC’s involvement marks a rare instance of a Canadian chartered bank playing a lead role in taking a cannabis company public.
Canopy Growth, which has a market value of C$15.4 billion, owns about 25 percent of Canopy Rivers. Shares of Canopy Growth closed up 6.5 percent at C$67.57 on the Toronto Stock Exchange.
“It’s Canopy Growth’s proxy for Google Ventures,” Bruce Linton, chief executive of both the companies, said in an interview with Reuters earlier this month.
Canopy Rivers is currently looking at investments in Europe and South America, Linton added.
A $4 billion investment in Canopy Growth by brewer Constellation Brands revived share prices late in the summer after a decline earlier in the year.
($1 = 1.2904 Canadian dollars)
Reporting by John Tilak; Additional reporting by Nichola Saminather; Editing by Leslie Adler