Another medicinal cannabis company hit the ASX boards this morning and had an extremely successful start to life as a listed company.
The Althea Group Holdings Limited (ASX: AGH) share price finished the day at 56 cents, up 180% from its listing price of 20 cents.
At one stage its shares tripled in value and reached 60 cents.
What does Althea Group do?
Althea is focused on importing, cultivating, producing, and supplying medicinal cannabis for eligible patients across Australia.
The company issued 98.25 million new shares at $0.20 per share in the IPO, raising $19.65 million and giving it a market capitalisation of $40.6 million upon listing.
According to the release, Althea’s focus is on its strategic partnerships and a three-stage business model built on early revenue generation, sales driven growth, and scalable domestic production.
The Melbourne-founded company has engaged a team of medical science liaisons who are working to assist medical practitioners to become prescribers, and pharmacists to become suppliers, of Althea products.
It also counts one of the largest Canadian medicinal cannabis companies as a shareholder. C$4.65 billion Aphria Inc took a cornerstone position in the IPO by subscribing for a further 17 million shares, bringing its holding in the company up to 25%.
Management has advised that Aphria continues to be hands on in its support of Althea’s growth strategy in Australia.
Should you invest?
While I think it is too soon to invest in Althea Group, I do think it could be worth keeping an eye on its progress over the coming year or two.
Competition certainly is heating up in the Australian market and it is hard to predict which company will ultimately take the spoils, but Althea seems well-positioned to challenge.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.