Cannabis companies use green dollars to take on debt with Bespoke Financial

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With the cannabis bank having suffered a setback in recent days in Congress, private debt provider Bespoke Financial raised its largest credit facility to $ 125 million with plans to deploy the capital within a year.

Bespoke Financial has raised capital for the credit facility of an institutional investment fund with more than $ 2 billion in assets under management, said George Mancheril, CEO of Bespoke Financial. Citing confidentiality agreements, the company declined to name the investor.

“Our fundamental belief is that cannabis will function like any other segment of consumption,” said Mancheril. “They all depend on debt to function and grow. The idea is that it will be a reality and that we can be a front runner on the debt side. “

The credit facility comes after Bespoke Financial raised $ 8 million in venture capital in April in a round led by Snoop Dogg’s cannabis investment firm Casa Verde and Sweat Equity Ventures.

Last week, Congress withdrew the SAFE Banking measure from potential passage as part of the annual defense spending bill. The measure to open up the banking system to cannabis companies would have helped cannabis companies raise capital.

See also: Hope for SAFE The banking measure goes to 2022

As setbacks at the federal level have slowed the flow of capital to the sector, some institutional capital pools are suddenly gearing up for cannabis lending, Mancheril said.

Cannabis companies have been able to raise capital by selling stocks, often on the Canadian Stock Exchange. And in 2017 and 2018, the vast majority of their capital came from equity investors. However, the debt issuance removes the uncertainty of raising equity capital under declining market conditions, Mancheril said.

“It’s very difficult to start an industry from the ground floor,” Mancheril said. “Valuations will be reduced if you tie funding to equity – if you are trying to raise funds in a declining market,” he said. “Debt financing is a more manageable source of capital and we felt we could be a leader if we find good borrowers. “

Bespoke Financial lends to companies with revenues between $ 10 million and $ 150 million to provide capital for the growth of various cannabis businesses, with loans of up to $ 15 million. The company secures loans on social assets, excluding real estate. In some states, cannabis stocks can be used as collateral.

Founded in 2018, Bespoke Financial began lending from a $ 10 million credit facility in 2019. It has grown its debt pool to $ 50 million in 2020 and now to $ 125 million. At the last check, Bespoke Financial is working on 12 regulated markets and has advanced over $ 200 million in capital to borrowers.

With Casa Verde Capital and Sweat Equity Ventures, Bespoke Financial has raised its $ 8 million Series A financing round with participation from Ceres Group Holdings, Greenhouse Capital Partners, DoubleLine Capital co-founder Philip Barach and the capital- risky Robert Stavis. In total, Bespoke had raised $ 28 million in funding in April.

Prior to joining Bespoke Financial in 2018, Mancheril worked as Vice President of private equity firm Guggenheim Partners.

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