The first major investor to take the plunge into the Zimbabwe cannabis market is London-based Eco-Equity which has raised R178 million (BP8,1 million) for a facility near Harare.
Eco-Equity, founded by Zimbwean-born Jon Paul Doran, acquired Zimbabwe’s first five licenses for cultivation for export in 2018. The company has begun construction on its facility in association with Dutch company DutchGreenhouses and intends employing 300 workers for the first phase of the project which will see high quality medicinal marijuana exported to the European Union.
The firm has now opened a second round of funding for BP10,2 to achieve its targets by introducing a convertible loan note instrument to investors offering 15% interest per annum in order to achieve its funding target. Overall the business plan requires BP18,3 million, three quarters of which is earmarked for capex, and BP3 m for operations.
Doran hopes to attract investors through cost leadership advantage – an all-in production cost of below US$50/gram – and through getting in on the ground early in Africa.
The convertible loan note is available to individuals who qualify as high net worth individuals, as well as Family Office, institutional, professional and sophisticated Investors. The loan note is also available to high net worth companies and institutions.
The loan notes shall not be redeemable and shall automatically be converted into ordinary shares in the company. The loan notes have a mandatory conversion date of 36 months from the date of the issue. The interest of 15% shall be paid annually.
Jon-Paul Doran, CEO of Eco Equity, said: “Launched two years ago, Eco Equity is cultivating and exporting from Zimbabwe as well as providing dispensary locations in Antigua. The convertible loan note instrument we are launching with a 15% return delivers on our commitment to ensuring maximum returns for our investors.
“Medicinal cannabis has proved itself to be one of the more resilient industries during the coronavirus pandemic. Having begun cultivation in Zimbabwe, we are looking forward to the next stages throughout the rest of 2020 and into 2021 as the market goes from strength to strength.”
The proceeds from the loan notes will be utilised to continue the advancement of the company’s project in Zimbabwe. Eco Equity will use the funds to obtain extraction equipment, refining equipment, and the completion of three green-housing facilities, seeds and working capital.
Eco Equity is based in London and is the pharmaceutical arm of investment vehicle JPD Capital. Eco Equity has operations in Zimbabwe with advanced plans to enter the Antiguan market. Eco Equity secured one of five licences to cultivate cannabis for medicinal purposes in Zimbabwe in late 2018. Cultivation was due to start as scheduled in the second quarter of 2020, however coronavirus has delayed that until the end of Q4 2020.