There was big news in the cannabis sector on Tuesday and it came via the Big Banks. Bloomberg is reporting that several former investment bankers with JPMorgan and Deutsche Bank AG are launching “a new cannabis-focused asset manager”.
Silver Spike Capital will be the corporate vehicle for this venture. The fund plans to raise from $500 million to $1 billion by Q4 for direct lending. Silver Spike also intends to be active in private equity and via hedge funds as well – where it is looking to raise an additional $200 million.
These new funds will be in addition to Silver Spike Acquisition Corp., this is a separate SPV that listed on NASDAQ in August, planning to deploy $250 million to acquire “pot-related businesses” within the next 18 months.
Scott Gordon, the founder and CEO of Silver Spike Capital described the cannabis space as a “messy, choppy market”. Cannabis investors can attest to that description.
However, with cannabis retail sales continuing to surge strongly in Canada and regulatory movement on the near-term horizon in the U.S. (on several fronts), all the industry needs is a catalyst. Two billion dollars in new capital flowing into the industry would be a good start.
While North America will be the initial focus of investment activity, Silver Spike is committed to global investing in the cannabis sector. It is looking to set up additional offices in Europe, South America and even Asia as additional cannabis markets open up.
While weak valuations in marijuana stocks may be discouraging some investors at present, many major players in markets (from both the investment and corporate spheres) continue to gravitate to cannabis.