Greencare Capital PLC (AQSE:GRE), the Aquis Exchange-listed investment company, has said it is proposing a switch of its investing strategy away from cannabis and CBD investments to technology-driven businesses, as well as a change of the company name to MaxRS Ventures.
In its annual report for the year ended 31 October 2021, which was announced on 26 April 2022, the Greencare board of directors commented that the CBD sector had not performed well and the novel foods legislation developments in the UK, whilst assisting to provide clarity, would likely cause short to medium-term turbulence in the market.
Further, the board advised that, within Europe, novel foods legislation is still to be agreed and that reaching such agreement has been much slower than initially anticipated. As a result, cannabis and CBD investments within Europe had proved difficult.
At the time, the company's board further advised that it would take a cautious approach to CBD and cannabis investments and turn its attention to other areas of its investing strategy being related health, wellness and plant-based medicine investments.
During the period since that statement, the company said, the cannabis and related business sectors have generally continued to perform poorly and the sectors have not generated the quality or underlying value of investment opportunities originally envisaged by Greencare at the time of its flotation in December 2019.
Thus, following a further review of the company's area of focus and its operations to date, its board has concluded that it is in the best interests of all shareholders for the company to withdraw from the medicinal cannabis, CBD and related wellness markets and, instead, adopt a new investment strategy based on private equity style investing in technology-driven businesses.
In a statement, Greencare said: "The board firmly believes that, as a result of the current challenging global economic and geopolitical landscape, opportunities now exist to invest in or acquire distressed or out of favour assets which have become undervalued, or, assets which may benefit from consolidation.
"The company's underlying investment driver will be technology-driven businesses based on their potential future value enhancement and investment returns. The board has identified four sectors of initial focus, and will likely in future target other technology-driven sectors. These initial sectors include Life Sciences, Crypto businesses and assets that use crypto technology, Impact Investing (Environmental and Renewables) and Retail."
The company said it is the board's intention, subject to shareholder approval, to implement a growth incubator/pre-IPO investment philosophy as its investment strategy, whereby it will seek out early-stage or undervalued later-stage businesses with strong upside potential, with the objective of acquiring, funding, growing and selling-on the investments through the public markets at enhanced valuations. The board will not restrict the jurisdiction of investments since the application of technology is not constrained by geographic borders, however, it would expect that it will consider more investments in Europe, the company added.
Subject to shareholder approval at a general meeting, the company anticipates that investments will be made from its own balance sheet and/or in partnership with other investing entities and will be expected to be in the form of equity and equity-related instruments, including convertible debt instruments, and, debt. The company said it may offer its ordinary shares and debt instruments in exchange for shares in investee businesses.
Greencare said it may invest in quoted or listed companies, that are publicly traded, and private companies. It may acquire investments directly or by way of holdings in intermediate holding or subsidiary entities. The company may also invest in limited liability partnerships and other forms of legal entity and it may invest in majority or minority positions and will ensure that it has suitable investor protection rights, as determined by the board.
The company said it intends to realise value through exiting the investments over time and will have no fixed investment period.
Greencare noted that although its board has a wide experience in venture, pre-IPO and private equity investing, the intention is to add an advisory board to the company to enhance knowledge in other areas as appropriate based on the opportunities being considered.
In order for shareholders to consider and vote on these changes, Greencare said a general meeting of the company will be held at its offices, 50 Sloane Avenue, London SW3 3DD at 9.30am on Wednesday, 28 December 2022.