A powerful new force has emerged in the South African cannabis industry in the form of Impilovest, an innovative business model that is the result of a mega-merger of Western Cape cannabis-related businesses. The combined energy from this consolidation is likely to generate over R1 billion within the next five years.
Let’s call it the “Bidvest of Cannabis”. After months of behind-the-scenes negotiations led by Afriplex’s Danie Nel, a new cannabis grouping has emerged in the Western Cape with its core assets being Medreleaf, Afriplex and Releaf Pharmaceuticals. The new group’s ownership includes numerous private international investors, and the business model is likely to be a game-changer in an environment where the major players are struggling in the face of regulatory uncertainty.
The emergence of Impilovest is one of the major developments in SA cannabis in the past year and the consolidation of existing businesses and brands under one roof is going to have significant financial firepower and market influence. The new group has been stitched together quietly by Nel together with a number of influential international investors and local management teams and shareholders. Nel tells Cannabiz Africa that “the structuring of the group has taken the better part of 18 months within numerous strategic alignment sessions and operational discussions taking place to get to this point”.
He says the business model is soundly grounded in reality and does not depend on regulatory changes going forward.
“The revenue is already there” he says. The Paarl-based group will look to achieve R1 billion turnover within the next 5 years, having already signed and sealed joint ventures in the European Union, South America and the Far East.
The group’s Director of Business Development, Paul Nunes outlined the new group’s structure and plans in an exclusive interview with Cannabiz Africa on 14 December 2022.
He says the group’s vision can be summed up in the name “Impilo”, which basically means “health” in Zulu.
“Impilovest is basically a network of existing cannabis-orientated businesses that have come together under on vertically integrated value chain”, says Nunes. “The sum is more than the whole of the parts” when the individual companies’ strategies are bought into alignment and that Impilovest will be:
Introducing a Section 21 medical cannabis patients scheme in association with Releaf Pharmaceuticals.
Being proudly part of South Africa’s ground-breaking and ethically-approved cannabis clinical trial to see whether cannabis can replace opioids in pain management (participants in the Releaf Pharmaceuticals trial will be provided with medication for no charge during their time on the trial);.
An exclusive third-party distribution deal to have its products marketed and sold in South America, in what Nunes describes as “an exciting development in a key emerging market. “
Nunes says Impilovest has a “Bidvest model” with three main operating divisions: cultivation, manufacturing and retail, each with their own GM: Stefan Nel is head of cultivation, Arno Roux is in charge of manufacturing and Wilco Janse van Vuuren is the manager driving retail.
Both Afriplex and Medreleaf have SAHPRA licences covering cultivation, processing and exporting. External cultivators are supplying biomass to the various operations within Impilovest. Impilovest operates on the principle of outsourcing raw material supply to partner cultivators.
Paarl-based extraction and processing facility Afriplex is the core of Impilovest’s manufacturing operations going forward; it is already processing cannabis-related products for Releaf and other members of the group; Afriplex offers a full turn-key solution for third party clients as well.
The retail division, says Nunes, has “quite a few consumer-facing entities”, the most important being ReThink, the largest player in South Africa in the CBD space.
“The brand will look to really drive thought-leadership around this API over the coming months and get consumers to trust in the effectiveness of the product. Our Releaf Cannabis Clinic is a Section 21 A processing and doctor consultation platform, which we will look at key strategic partners to allow for its growth and giving patients for accessibility to cannabis medicine”.
Nunes, who comes from a pharmaceutical and retail background with over 10 years of experience in this sector, says: “The businesses are already there, from genetics and cultivation through to retail, and Impilovest will give them scale as it is a platform from which to raise money from the investment public. We have received significant interest from international investors. Therefore, there is no intention to raise funding from the public. The current shareholders have committed to the expansion plans for the next 5 years.”
He says “We aim to achieve around R1 billion of revenue across the group in the next 5 years. But some of the existing businesses have been around for more than 20 years with proven financial track record which is different to some the cannabis fly-by-nights business that have opportunistically risen up in the South African market. We will be looking at expanding our cannabis activities across all businesses in the value chain not only in South Africa but abroad as well.