Medical cannabis company Kanabo soars in London market debut – MarketWatch

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Shares in Kanabo Group more than doubled in value on Tuesday, after the maker of vaporization and inhalation technology for cannabis made its stock market debut in London, highlighting investor appetite for exposure to the fast-growing sector.

Tel-Aviv-based Kanebo is going public via a merger with special-purpose acquisition corporation Spinnaker Opportunities Plc. SPACs, or blank-check companies, raise money in an initial public offering and then have about two years to acquire a business or businesses.

Kanabo raised £6 million ($8.3 million) in cash from a share sale at 6.5 pence per share linked with the deal. The company has a market capitalization of just over £23 million. Proceeds will be used for sales, marketing, and research and development.

Shares in Kanabo rose above 20 pence as the stock started trading, up more than 200% from its placing price, before closing at 18.5 pence a share in London.

Read: To profit from planned merger of Tilray and Aphria, buy Aphria, says this analyst

The IPO comes amid growing demand for medical cannabis, which is increasingly used to treat mental health conditions such as depression, and has prompted some countries in Europe to amend their listing rules.

In September 2020, the U.K.’s financial regulator, the Financial Conduct Authority, said that U.K.-based cannabis firms could list in London, but only if they produce the drug for medicinal purposes. Medical pot was legalized in the U.K. in 2018, but recreational use is against the law.

“London may be set for a boom time for cannabis listings with Kanabo the latest to IPO today after MGC Pharmaceuticals MXC, +13.04% last week,” said Neil Wilson, chief market analyst for Markets.com, in a research note to clients on Tuesday. “It follows the FCA’s decision last year to allow medical marijuana companies to list in the U.K., which could create a major European trading hub for cannabis companies which is currently dominated by Toronto and New York,” Wilson added.

Read: Here are analysts’ favorite marijuana stocks, which they expect to rise as much as 82% in the next year

Australia’s MGC Pharmaceuticals MXC, +8.41%, which makes medicinal products out of cannabis plants, started trading on the bourse on Feb. 9. Meanwhile, Cellular Goods, a provider of cannabis-based consumer products backed by retired soccer star David Beckham, announced its intention to seek a London listing, which it said will make it the first London Stock Exchange-listed ‘pure-play’ consumer cannabinoid brands company.

The listings come after GW Pharmaceuticals GWPH, +0.33%, a U.K. company with a Nasdaq listing, agreed to be acquired by Jazz Pharmaceuticals in a $7 billion deal. GW Pharma is the first company to win U.S. regulatory approval for a cannabis-based drug, its Epidiolex, a treatment for severe forms of childhood epilepsy. Jazz specializes in sleep treatments.

This article originally appeared here in https://www.marketwatch.com/story/medical-cannabis-company-kanabo-soars-in-london-market-debut-11613495569

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