A few weeks ago, CannaRoyalty (CSE:CRZ)(OTC:CNNRF) announced that they are forming a joint venture with a unnamed Canadian institutional investor to invest in Canadian cannabis companies. Today, CannaRoyalty announced that the 'unnamed' institutional investor is Sprott, Inc. Sprott is an alternative asset management company that focuses on natural resource investments.
About the Joint Venture
The joint venture will focus on making debt investments in the legal Canadian Cannabis sector. Companies that the joint venture may target include licensed producers, LP applicants, and more. CannaRoyalty will use the company's experience as a diversified investor in the cannabis space to identify and refer investment opportunities to the joint venture. Sprott will contribute its expertise regarding debt investments in the natural resource sector (a area that, like the cannabis space, is not fully served by the credit markets and traditional bank lending). Sprott will arrange the investments’ financing and CannaRoyalty will be able to participate on a case-by-case basis as desired.
CannaRoyalty will participate in realized returns from joint venture’s investments and will have the opportunity to directly enter into separate agreements including "royalty, streams, offtake agreements or other business relationships" with joint venture borrowers. The joint venture is expected to be launched upon the closing of the previously announced $12 million CAD financing. Closing of the financing is expected by July 31, 2017, subject to the requisite approvals and due diligence.
In connection with the joint venture and financing, Sprott was granted the right to nominate a director for CannaRoyalty's board. Today, Sprott announced that they are nominating Mr. Peter Gundy. Mr. Gundy graduated from the London School of Economics with a Master's of Science, Economics, McGill University with a Bachelor of Civil Law, and the University of Western Ontario with a Bachelor of Arts. Mr. Gundy began his career as a mergers and acquisitions lawyer in Montreal. He also co-founded Potash Corporation, where he served as Executive Vice President, Finance and Chief Financial Officer.
Mr. Gundy currently acts as chairman of Alexandria Minerals Corporation and has served on a number of other boards.
CannaRoyalty's board is expected to appoint Mr. Gundy as Director and chair of the company's audit committee upon the closing of the financing.
CannaRoyalty's CEO, Marc Lustig
"As Canada continues moving towards full-adult use cannabis legalization, we are beginning to see an increased quantity and quality of true value-add domestic investment opportunities. We believe this JV will be an accretive vehicle for CannaRoyalty to leverage its extensive experience in the global value-add cannabis sector to gain additional exposure to those high-growth opportunities. Target investments will gain not only CannaRoyalty's deep experience in the value-add cannabis sector, but also, access to a credible and highly respected institutional lender in Sprott, whose access to capital, strategic expertise investing in emerging sectors, and extensive corporate finance experience truly differentiates it from competitors in the space. We are pleased with how the relationship has already advanced and provided an immediate contribution in terms of valuable Board experience with the nomination of Mr. Gundy."
Sprott's CEO, Peter Grosskopf
"We look forward to helping CannaRoyalty continue expanding its footprint in Canada and leveraging our expertise and relationships in the natural resource sector to advance new investment opportunities."
Learn more about CannaRoyalty Corp. by checking out the company's marijuana stock profile in our global marijuana stock database.
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