Hygrovest Ltd (ASX:HGV) is continuing to diversify its investments across strategies and sectors while creating value from its existing portfolio of investments.
New investment strategy
In terms of Hygrovest’s existing portfolio, it continues to focus on generating exits from some of its cannabis names and recommitting that capital to higher growth opportunities across diversified sectors in Australia and North America.
In addition to diversification across sectors, the company is also exploring opportunities to diversify its capital across strategies as well.
Hygrovest’s existing strategy has been to invest in private companies with an expectation for a liquidity event within 18-24 months.
The company is now seeking to allocate capital to a second strategy that focuses exclusively on isolating warrants and options that are frequently bundled with many secondary private placements on listed public equities.
Hygrovest’s investment portfolio.
Recent highlights
Entourage Health Corp debentures
As part of its effort to create value from existing investments, Hygrovest is planning to divest its investment in Entourage Health Corp (ENT).
Hygrovest will support proposed changes to the terms of the unsecured convertible debentures issued by ENT, which would allow the company to divest its investment in ENT convertible debentures above the current book value.
Notably, the divestment will bring forward the maturity date to June 30, 2022, and reduce the redemption percentage from 100% to 60% of face value.
If the meeting of ENT noteholders approves the amendments, ENT will redeem Hygrovest’s notes for C$3.6 million, plus accrued interest on or around June 30, 2022, which is a premium to HGV’s book value of C$2.5 million as of April 30, 2022.
Harvest One
Hygrovest investee Harvest One has agreed to a supply agreement with Canopy Growth which enables Harvest One to sell its LivRelief topical creams on Canopy's Spectrum Therapeutics' online medical store.
Harvest One also reported March 2022 (Q3) financials which are encouraging – with revenue up due to US-based sales and costs continuing to decrease.
Management anticipates that “sales volumes, net revenues, and Adjusted EBITDA will continue to improve through the next quarter due to continued increases in infused topical sales, expanded distribution coverage, product launch and branding initiatives, improvements in gross profit, a continued focus on reducing overhead costs, continued entry into the U.S. market, the normalization of the supply chain, and a reduction in pricing pressures though market rationalization.”
Southern Cannabis Holdings
Southern Cannabis Holdings’ product focus is starting to pay off with revenues nearly double per month from 6 months ago and the Prescription Vape business experiencing growth with many repeat customers.
The company’s cash balance is expected to handle any unforeseen circumstances with the opportunity for significant revenue growth for the next fiscal year.