Daily Maverick
Dailymaverick logo

Business Maverick

Business Maverick, South Africa

High time: SA cannabis products firm Cilo Cybin to list on JSE

High time: SA cannabis products firm Cilo Cybin to list on JSE
An employee displays a bottle of Nicotinamide Mononucleotide (NMN) nootropics in a grow room at the Cilo Cybin Pharmaceutical Ltd. facility in Samrand, South Africa, on Friday, Aug. 20, 2021. Cilo Cybin is considering an initial public offering in the next 12 months after becoming the first South African company to win the right to grow, process and package cannabis products. Photographer: Waldo Swiegers/Bloomberg via Getty Images
Ed Stoddard
By Ed Stoddard
11 Sep 2022
Facebook
1
The cannabis economy is rolling along worldwide but, in South Africa, policy inertia remains the order of the day. Still, it’s not all up in smoke and there are some green shoots emerging.

Cilo Cybin, the first and so far only South African company with a licence to grow, process and pack cannabis, is aiming for a JSE listing as a Special-Purpose Acquisition Company (SPAC), the first in five years.

The initial opening date of the IPO was for May, but it is now Monday, 12 September, and Cilo Cybin hopes to start trading on 14 November. 

In a Sens statement on Friday, 9 September, the company said it was aiming to raise a minimum of R500-million and up to R1.9-billion with the initial public offering (IPO) if “investor demand warranted it”. 

“The industries Cilo Cybin envisions to participate in include biotech, cannabis, psychedelics, wearable devices and custom nutrition, subject to regulatory approvals where required,” the company said. “The company has identified potential opportunities to acquire several assets located in South Africa and the United States of America.”

An SPAC listing is aimed at raising capital for acquisitions. This requires an “empty vessel” without a financial history or profit. So the SPAC listing will be Cilo Cybin’s holding company. 

“We want to go public because we want to raise funds for the rest of the business, not necessarily the cannabis side. And the quickest way to do it is through an SPAC. So what we are doing is we want to raise R500-million to R2-billion through our SPAC. And that goes into our holding company,” Cilo Cybin president Gabriel Theron told Business Maverick at the company’s state-of-the-art art manufacturing facility in Midrand recently. 

“We want public participation, not just the big guys,” Theron said. 

Lack of public participation is one of the reasons why new listings on the JSE have all but dried up, with new SPAC listings as rare as hen’s teeth. According to the JSE, the last SPAC listing was for RH Bophelo in 2017.

“An SPAC is used to raise primary capital for a shell company with the promise of going off and making acquisitions. But the issue is you can’t raise primary capital on the JSE. So, the whole concept of an SPAC is stillborn,” Paul Miller, the director of consultancy AmaranthCX and a frequent critic of SA’s savings and investment sector in these pages, told Business Maverick. 

“The problem is that the big institutions will only invest in large, liquid companies and, by definition, an SPAC is a small company. An SPAC is about primary capital raising and it takes it one step further — it is about primary capital raising for a shell and the management team promises they will go and find a business to buy,” he said. 

An employee displays a bottle of Nicotinamide Mononucleotide (NMN) nootropics in a grow room at the Cilo Cybin Pharmaceutical facility in Samrand, South Africa. (Photo: Waldo Swiegers / Bloomberg via Getty Images)





Visit Daily Maverick's home page for more news, analysis and investigations



Going high-tech


There is a stereotype that cannabis farming is a small-scale, peasant kind of affair and that is certainly the case across much of Africa. But Cilo Cybin is high-tech and is also about CBD and other related-cannabis products. 

“Cilo Cybin combines biohacking, biotech and pharmaceutical methodologies to deliver a holistic and individualised solution that enables our customers insights into their health, performance and longevity that they never had before,” is how the company describes itself on its website. 

Its CBD products come in vape oil, liquids and other forms, and are designed to treat pain or sleep issues or to relax and relieve anxiety. There’s a CBD gel for external use for muscle or joint pain. There are also various supplements and even devices such as the Brain Gauge, which claims to measure changes in the brain’s function. 

Business Maverick donned a lab coat and even a hair net — which was kind of funny in the case of this correspondent — to tour some of the facilities. Everything from the growing to the injection of fluids into vape devices is highly automated. This is high-tech and capital intensive, but not labour intensive — the Fourth Industrial Revolution is not going to solve South Africa’s unemployment crisis.

The company also wants to move away from growing cannabis (there are more than 50 licensed growers in South Africa) and move fully into production and distribution of its product line.  

A legal, recreational and taxable cannabis trade involving THC products — the kind that get you stoned — remains some way off in South Africa, where policymaking remains shrouded in a cloud of smoke. The likes of Canada have taken the clear lead on this front. 

But a cannabis listing would signal that the cannabis economy is gaining traction. And the JSE could surely do with another listing or two these days. DM/BM

Categories:

Tags: