How Dual Listings Are Helping Cannabis Companies Access Capital
November 27th, 2018
Exclusive, News, Top Story, Uncategorized
The cannabis industry is projected to reach C$22.6 billion by 2026, according to Cowen & Co., driven by the legalization of adult-use cannabis earlier this year. While Canadian investors have been voracious buyers, many companies have expanded their efforts to reach United States and European investors through dual-listings. These dual-listings offer the ability to increase liquidity, reach more investors, and ultimately, generate more value.
In this article, we will take a look at why cannabis is leading the way in dual-listings and how companies like NexTech AR Solutions Inc. (CSE: NTAR) (FSE: N29) are capitalizing on these dynamics to build long-term shareholder value.
Where You List Matters
Most North American investors are familiar with U.S. and Canadian stock exchanges, such as the NYSE, NASDAQ, CSE and TSX, but these exchanges only reach investors in those countries. European investors don’t have an easy way to buy securities on these exchanges—just like North American investors can’t easily access European exchanges. These dynamics can limit investor access to public companies on a global level.
Dual listings, also known as interlistings or cross-listings, enable public companies to list their securities on two or more different exchanges. These listings provide access to greater liquidity, more capital, and longer trading hours. For example, many Australian and Canadian resource companies list their shares on European exchanges because there’s substantial investor interest due to the lack of local resource companies.
The downside of a dual listing is that most foreign listings have less liquidity than the domestic listing. For example, many foreign companies dual-list in the United States using American Depositary Receipts, or ADRs. Many ADRs don’t have as much trading volume as their counterparts on a foreign stock exchange. For companies, the cost of a dual listing can also be prohibitive—especially if there are differing regulatory and accounting standards.
Cannabis Leads the Way
Many small-cap companies have leveraged dual listings to help build a more diverse shareholder base and raise more capital at less cost. In particular, small-cap companies that operate in industries that aren’t necessarily available overseas have an opportunity to attract a large number of investors and raise more capital. The most prominent industry meeting these criteria is Canada’s nascent cannabis industry.
Canada’s cannabis industry is projected to reach C$22.6 billion in size by 2026, according to Cowen & Co., driven by the legalization of adult-use cannabis earlier this year. Unlike the United States and Europe, Canada legalized cannabis on a federal level to eliminate regulatory risks and open the door to export markets. The country’s highly evolved market has attracted investors from around the world.
Many Canadian companies have sought dual listings to capitalize on these dynamics. For example, NexTech AR Solutions Inc. (CSE: NTAR) recently announced its new listing on the Frankfurt Stock Exchange (FSE: N29), which is the largest European stock exchange. The company’s plans to combine augmented reality with the cannabis industry could open the door to significant long-term growth opportunities.
The Frankfurt Stock Exchange is one of the world’s largest trading centers for securities. With a share in turnover of around 90 percent, it is the largest of Germany’s seven stock exchanges and it is an international trading center, which is reflected in the structure of its participants. Of the approximately 200 market participants, roughly 50 percent are from countries other than Germany.
NexTech AR Solutions Inc. represents a compelling opportunity in the cannabis industry with its augmented reality and holographic teleportation technology that it aims to bring to the cannabis industry. With its dual-listing in Canada and Europe, the company is well positioned to reach a growing number of investors, increase liquidity for its shareholders, and ultimately build long-term shareholder value.
For more information, visit the company’s website at www.nextechar.com.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://www.cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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