Chemesis International (CSI.C) launched a CAD$5.8 million non-brokered private placement led by a multi-billion dollar alternative investment fund group.
Global Emerging Markets (GEM) is a global investment fund focused on emerging markets and providing its investors with a diverse set of assets from high-end fashion to auto parts manufacturing.
GEM and its partners provide exposure to small-mid cap management buyouts, private equity investments and certain venture investments.
Founder, Christopher Brown, leads a staff of 15 investment professionals with almost two centuries of combined finance, business development and management experience.
Brown was on the board of directors of Bahrain-based VC Bank and co-sponsor of the GEM Middle East North America (MENA) Fund, a $250 million venture capital fund launched by VC Bank and GEM focusing on small and medium-sized ventures in the GCC and MENA regions.
The fund, launched in 2006, is the first of its kind and according to VC Bank officials, is in full compliance with Islamic Shari’ah principles.
GEM’s portfolio spans 70 countries and five continents and according to its website, it has experienced approximately 22% in realized returns from private investment in public entities like Chemesis.
The firm is a late-stage investor focused on growing companies with less than US$20 million in revenues.
The deets
Chemesis’ offering will consist of 3,152,174 units at a price of $1.84 per unit. Each unit is comprised of one common share and one common share purchase warrant exercisable for one common share at $2.50 for up to 24 months from the closing date.
Management intends to use the net proceeds from this PP to ramp up oil production at the company’s state-of-the-art extraction facility located in Cathedral City, California.
This would build on the more than $200K in monthly purchase orders the company secured back at the beginning of February when it acquired and installed leading-edge low temperature “live resin” extraction units at Cathedral City and implemented the corresponding extraction methodologies.
“We believe this financing will allow us to capture greater market share by
increasing our oil production, developing additional proprietary product formulations and expanding our distribution infrastructure throughout California. The Company sees tremendous growth potential within California, and believes it can expand to meet future demands”, said CEO of Chemesis, Edgar Montero.
California’s legal cannabis market dwarfs the other American states and even though it is experiencing hiccups out of the legalization gate, it is still expected to reach $5.1 billion in 2019.
Chemesis’ PP offering remains subject to regulatory approval and expected to close on or about March 1, 2019.
The GEM deal provides the necessary financial backing for Chemesis to execute its growth plan, but the company needs to move fast.
The next nine months will be important for Chemesis to get in on the ground floor of California’s market, otherwise it will be fighting for scraps, big scraps mind you, but scraps nonetheless.
Chemesis was in the news recently when the vertically integrated global cannabis producer announced a plan to add 25,000 square feet of manufacturing space in Cathedral City.
Shares sank approximately 17% or CAD$0.36 on low to moderate volume as investors sold into the news, resting at $1.68 by the end of trading.
Chemesis currently has 75,650,921 issued and outstanding shares with a market cap of $127.1 million.
–Gaalen Engen
Full Disclosure: Chemesis International is an Equity.Guru marketing client.