Rua Bioscience was founded in 2016 on the East Coast, and the company is aiming to be a leading producer of cannabinoid derived medicines.
Up to $20 million in new capital is being sought to fund Rua’s next stage of development, support the achievement of sustainable revenue and accelerate growth. The company’s market capitalisation of $70 million assumes the offer of 40 million shares, at the offer price of 50 cents per share, is fully subscribed.
Rua intends to list on the NZX Main Board in late October 2020. All funds raised will be for growth, with no sell-down by existing shareholders at the time of IPO. Cornerstone shareholders, directors and senior managers who are currently shareholders in Rua will be escrowed for approximately 11 months.
Chairman Trevor Burt says Rua received strong support in the bookbuild. “We are very pleased that New Zealand’s investment community sees Rua as a credible and focused company within a sunrise industry. The demand for shares was well in excess of our target, and allocations to some participants in the bookbuild needed to be scaled.”
“We are proud of the company, its progress and its clear strategy presented in the PDS for prospective investors,” says Mr Burt.
Co-founders Manu Caddie and Panapa Ehau say “The IPO is an important step in realising our goal of creating a sustainable business that delivers high value jobs and contributes to economic opportunities for the Waiapu Valley and the wider Tairāwhiti region.”
A total of $15 million shares have been allocated across a number of retail brokers in New Zealand, as well as to a small number of institutional investors.
A Priority Offer of $5 million of shares is available to Tairāwhiti residents (in the postcodes of 4000-4099), existing shareholders in Waiapu Investments Limited and other people closely associated with the business.
The Offer is expected to open on Monday 5 October 2020. As there is no public pool of shares available in the Offer, members of the public that do not meet the priority criteria are encouraged to contact their broker.
Proceeds from the Offer will be invested in German market development, the expansion of Rua’s current facilities, investment in long-term research and development, and to fund operational costs and working capital as Rua enters commercial production.
The PDS and link to the Register Entry containing additional material information about the Offer is available at www.shareoffer.co.nz/rua
The Lead Manager of the Offer is Northington Partners Limited.
Operations and strategy
Rua Bioscience holds a Medicinal Cannabis Licence from New Zealand’s Medicinal Cannabis Agency and has recently completed construction of an operational controlled cultivation facility in Ruatorea and an extraction and manufacturing facility in Gisborne.
“As medicinal cannabis is a pharmaceutical product, these facilities must be GMP certified before commercial production can occur,” says Rua CEO Rob Mitchell, an industry veteran with over 30 years of global pharmaceuticals experience. “Our GMP paperwork has been submitted to Medsafe and our first GMP audit is scheduled to take place before the end of the year.”
Rua Bioscience has an “export-led” strategy aimed at achieving sustainable revenue as quickly as possible. Rua has signed a binding sales agreement with Nimbus Health GmbH a fully licenced German importer and distributor focussed on medicinal cannabis products.
“We are very pleased to have Nimbus as our distribution partner. Germany is the largest single market for GMP grade medicinal cannabis in the world and Rua anticipates its first exports to occur by the end of 2021,” says Mr Mitchell.
Priority and Broker Firm Offer opens – 5 October 2020
Priority Offer closes – 13 October 2020
Broker Firm offer closes – 16 October 2020
Settlement and allotment – 21 October 2020
Expected date of quotation & trading on NZX Main Board – 22 October 2020
All dates mentioned in this release are indicative only and are subject to change.
All existing WIL shareholders will be eligible to participate in a Priority Offer. The current intention is that eligible WIL shareholders and Tairāwhiti residents will be able to apply for shares online from 5-13 October.
The Priority Offer involves a pool of shares available for eligible investors (including existing WIL shareholders and Tairāwhiti residents) and if the Offer is over-subscribed and those purchasing shares have their allocation scaled back, Priority Offer participants will be scaled at a lesser rate to those in the rest of the Offer.
While dates are still subject to change, there is a second local roadshow planned for the week 5-9 October to provide application assistance to eligible WIL shareholders and Tairāwhiti residents who wish to participate in the Priority Offer to apply for shares in the IPO.
Time: 5.30-7.30pm 5/10/20 Mon Hinerupe, Te Araroa 6/10/20 Tue Hati Nati Cafe, Ruatorea 7/10/20 Wed Toko United Sports Club, Tokomaru Bay 8/10/20 Thu Tolaga Bay Inn, Uawa 9/10/20 Fri Te Poho o RawiriMarae, Turanganui-a-Kiwa/Gisborne
To provide the best opportunity for Waiapu Investments Ltd (WIL) shareholders and Tairāwhiti residents to have access to the full set of information on the Priority Offer for Rua Bioscience shares, we have delayed the East Coast roadshow to the weekend of 25-27 September. By this time we expect the Product Disclosure Statement (PDS) to be available with all the details of the planned listing of Rua Bioscience on the NZX.
Here are the dates, times and locations: Fri 25/9/20 – Hinerupe, Te Araroa: 5.30pm-7.30pm Sat 26/9/20 – Hati Nati Cafe, Ruatorea: 10am-12pm Sat 26/9/20 – Cafe 35, Tokomaru Bay: 2pm-4pm Sun 27/9/20 – Tolaga Bay Inn, Uawa: 10am-12pm Sun 27/9/20 – Wainui Surf Club, Okitu: 2pm-4pm
For those WIL shareholders unable to attend a roadshow presentation, we will email a link to the presentation on Sunday 27 September.
At this time, no money is currently being sought. The shares in Rua Bioscience Limited cannot currently be applied for or acquired under the intended offer of shares in Rua Bioscience Limited as part of the IPO (the “Offer”). If the Offer is made, it will be made in accordance with the Financial Markets Conduct Act 2013.
Rua Bioscience was founded on a dream of creating more sustainable employment opportunities in the Waiapu Valley. This remains a core goal of the company and something the board, shareholders and staff are committed to achieving.
Part of this commitment includes direct investment in local residents, especially young people, to upskill in areas of relevance to the business so that more locals have the necessary training and experience to take up roles with the company as it grows.
The range of activities to be funded (initially up to $50,000 per annum from Rua with additional funding and in-kind support from research partners and other organisations) include a combination of:
summer internships with research partners in Auckland, Wellington and/or Dunedin;
exposure trips for groups of locals to visit research and commercial partners around Aotearoa;
undergraduate scholarships for school-leavers and EIT Ruatorea graduates to go on to university or other tertiary studies in biology, chemistry, medicine, horticulture, engineering, health, Te Reo me ona Tikanga, accounting, law, marketing or other disciplines of relevance to the company;
graduate placements (with support from other organisations) to provide employment for university graduates;
career guidance for those interested in joining the medicinal cannabis sector;
student exposure experiences with Rua Bioscience staff visiting groups of school students to explain their work, background and advice for young people interested in the industry;
independent environmental monitoring support for ahi kaa involved in resource consent applications and consent monitoring activities.
We are currently working with a range of stakeholders to finalise details for the various opportunities. Information on eligibility and how locals can apply for these opportunities will be shared in coming months and publicised through Radio Ngati Porou, social media and community hui.
A message from co-founders Panapa Ehau & Manu Caddie…
Tēna tātou, ngā kairarau pūtea o Waiapu Investments!
Unfortunately due to Covid restrictions we have had to postpone our scheduled community roadshow that was due to take place along the Coast next week. Once there is some clarity from Government we will announce new dates.
So, while we can’t hui kanohi ki te kanohi, we do have three big announcements to make:
1. The first is that Rua Bioscience is contributing $50,000 over the next 12 months to support community capability building for local residents including a number of scholarships for tertiary students, industry exposure opportunities, internships with some of our research partners, local training opportunities, career planning resources and a bunch of other kaupapa. Details of this community investment are available on the Rua Bioscience website.
2. Fantastic news this week that Rua Bioscience has been granted a commercial license from the Ministry of Health. This is a really important milestone in the company’s journey and allows Rua to now move from incubation to full commercialisation. Thank you for your contribution to getting us here.
3. On behalf of the Rua Board, we also wanted to share with you the announcement confirming the company plans a Capital Raise and Initial Public Offering (IPO) to list Rua Bioscience on the NZX later this year. A copy of the full announcement is below for you. This has significant implications for sharesholders in Waiapu Investments, so read on! Over the last 18 months both of us have worked extremely hard to deliver on our original vision and to progress a company strategy for Rua Bioscience that is designed to build a resilient, sustainable, fully integrated business firmly located in the Ruatorea community and wider Tairāwhiti. We have achieved several major milestones including building a high-quality and experienced team, completing our commercially licenced facilities and securing a binding sales agreement with one of Germany’s top distributors of medicinal cannabis.
We’re as dedicated today as we were three years ago to our goal of creating sustainable employment opportunities on the Coast and last week the company recruited another Nati to move back into the rohe. Our small Ruatorea team will continue to grow over the next year alongside the world-class expertise we have already been able to attract to the company.
Now, with these solid foundations in place, Rua Bioscience is at a point where the business needs to start scaling up and requires funding to support the company into commercialisation and further deliver on its strategy. An IPO will provide that funding and give more whānau within Tairāwhiti and around Aotearoa an opportunity to invest in Rua – a highly focused leader in the medicinal cannabis sector, with a clear path to revenue.
Proceeds from an IPO will fund Rua Bioscience’s next stage of development, build long-term resilience and accelerate growth.
We’re also really proud that you, as an original Waiapu Investments shareholder, should see a substantial increase in the value of your investment once they are converted to Rua Bioscience shares, and you will have the same rights as all other Rua shareholders. Even though it has only been a couple years, it feels like a long journey to this point. While we would have loved to keep the majority of the company locally owned the reality is we have needed well over $20m to ensure we can create a sustainable enterprise – and while we have been to Tairāwhiti-based institutional investors a number of times to see if they would match the contributions from Waiapu Investments shareholders the offer was not taken up. Fortunately we have found others with the means to invest in what is still a comparatively risky opportunity and we are pleased to see a lot more interest from others keen to invest millions more in what we have been able to create from very low-key beginnings in Ruatorea.
Thanks to our friend Fiona Apanui-Kupenga and the awesome team at Amokura Productions who have been following our journey to date by working on a documentary for the Prime network – we also have a video to announce our plans for the IPO that you can watch by clicking the link in the announcement below.
We’ll update you further when the timing and details for the IPO are confirmed. In the meantime Waiapu Investments has set up a website at www.waiapuinvestments.nz with a Frequently Asked Questions section that we encourage shareholders to read before contacting Maudi Dewes (021 255 8743) who is available to answer any additional queries that Waiapu Investments shareholders may have. Of course, as always you can also bail us up at the Four Square, Waiapu Transfer Station or wherever you see either of us to let us know what you think or ask questions.
Rua Bioscience Licenced For Commercial Production, Planning IPO
Pharmaceuticals company Rua Bioscience announced today it has been granted a commercial licence to grow and supply cannabis-derived medicines from its new specialist growing and production facilities on the East Coast and is planning an Initial Public Offering to list the company on the NZX.
A leader in New Zealand’s sunrise medicinal cannabis industry, Rua Bioscience is one of the first to be licenced for commercial production and plans to be exporting its first product, Ruatorea grown pharmaceutical-grade dried cannabis flower, to Germany in the next 12 months.
With the green-light for its facilities to begin commercial operations and an export deal in place with leading German medicinal cannabis distributor, Nimbus Health, the company has revealed plans to raise capital and list on the NZX, with an Initial Public Offering slated for Q4 2020.
Rua Bioscience was founded in 2016 on the East Coast, as a subsidiary of Hikurangi Enterprises Ltd, and the company is focused on growing its reputation as a global innovator in plant science. Its team of growers, scientists and engineers have developed expertise in breeding, cultivating and processing cannabinoid-based plants tocreate effective medicines. ______________________________________________
“We believe an IPO will offer New Zealanders an opportunity to invest in a highly focused leader in the medicinal cannabis sector, with a clear path to revenue.” – Rua Bioscience Board Chair, Trevor Burt
“We are a company grounded in our purpose – to use the power of the plant to heal the people and the land – creating sustainable economic opportunities for our East Coast communities. This gives Rua’s success a deeper meaning for everyone involved.
“Over the last 18 months the business has worked to a clear strategy to build a resilient, sustainable, fully integrated business. We have achieved several major milestones including building a high-quality and experienced team, completing commercially licenced facilities and securing a binding sales agreement with Nimbus Health, one of Germany’s top distributors of medicinal cannabis.
“Now, with these solid foundations in place, Rua Bioscience is at an inflection point where the business needs to start scaling up and requires funding to support the company into commercialisation and further deliver on its strategy.
“New Zealand’s medicinal cannabis scheme became operational in April, and we are now licensed by the Ministry of Health to commercially cultivate and supply cannabis-derived pharmaceuticals for sale. Our co-founder, Manu Caddie was closely involved in the development of this scheme, and we understand the regulations and our obligations under them,” says Mr Burt.
“With New Zealand’s medicinal cannabis industry still in its infancy, Rua Bioscience is focused on a ‘doable’ export strategy to drive revenue over the next three years by making our first material sales through wholesale exports of dried cannabis flower to Germany.
“Germany is one of the world’s most advanced medicinal cannabis markets. Doctors there prescribe the dried cannabis flower to patients to use primarily for pain relief.
“At this stage we plan to go to IPO in the fourth quarter of this year, however this is subject to ongoing market conditions, company developments and other factors,” says Mr Burt.
IMAGE: Rua Bioscience Board, Trevor Burt (Chairman), Brett Gamble, Anna Stove, Panapa Ehau (Co-founder), Martin Smith and Kaihautu & Co-founder Manu Caddie.
Rua Bioscience CEO, Rob Mitchell says, “We have invested over $6 million in two state-of-the-art facilities that are now licensed and operational. In Ruatorea, we have an 8,000 square metre cultivation centre and a purpose-built extraction and manufacturing facility in Gisborne.
“The Ruatorea facility is designed as a Cannabis Cultivation Centre of Excellence. Its versatile, modular design allows us to grow our first commercial crops, prove we can meet international medicines standards and expand rapidly by adding additional capacity as we grow.
“Initially the medicinal products to be manufactured from Gisborne will be CBD oil and dried flower for export. Like in Ruatorea, this facility is also designed to be easily extended as our production increases. Currently, our system can process 2200 kilograms per annum, but with planned expansion modules this can easily be increased.”
“Having recently secured a binding EU export sales agreement with German distributor, Nimbus Health, these facilities allow us to begin production to fulfil orders. We aim to produce a few hundred kilograms ofpharmaceutical-grade dried cannabis flower in our first full year of operation,” says Mr Mitchell.
IMAGE: Rua Bioscience’s Chief Research Officer Dr Jessika Nowak analysing cannabis flower at Rua Bioscience testing lab.
Initial Public Offering (IPO)
Proceeds from an IPO will fund Rua Bioscience’s next stage of development, build long-term resilience and accelerate growth. All funds raised will be for new capital, with no allowance for a sell down by existing shareholders. Any IPO is expected to include a priority offer for Tairāwhiti residents.
“An IPO would be an important step for Rua, as a company founded and initially funded by a small Māoricommunity on the East Coast. It will support further investment in the Tairāwhiti region and allow ongoingparticipation by locals in Rua’s future journey. Panapa and I are proud to see how the company has developed and we are excited about its next stage of growth,” says co-founder and Kaihautu, Manu Caddie.
Existing shareholders in Waiapu Investments, which invested in Rua through a local crowdfunding raise in 2018, will have their shares converted to Rua Shares if an IPO occurs.
The number of shares and price range are yet to be determined. Further details of the structure of the IPO and more information will be provided to investors and the public in the coming weeks.
From Ruatorea to the world; how Rua’s seed to sale process works:
At Ruatorea the 8,000 square metre, high-security facility includes an outdoor cultivation area as well as four state-of-the-art indoor cultivation rooms, propagation and ‘mother plant’ rooms as well as drying, milling and packing rooms.
Plants grown at Ruatorea will be harvested, dried, graded and packed for transport to the new facility inTūranganui-a-Kiwa/Gisborne.
There, some flowers will go through a pharmaceutical extraction process using Rua’s Supercritical Fluid Extraction system imported from a specialist manufacturer in North America.
This will provide clean, efficient, large-scale production of botanical extracts, the foundation bioactive ingredient in Rua’s medicines.
Initially the medicinal products to be manufactured from Gisborne will be CBD oil and dried flower for export to Germany.
Rua Bioscience Milestones:
2016 – Founded as a subsidiary of Hikurangi Enterprises Ltd.
2018 – Waiapu Investments Ltd crowdfunding raises initial $2m. Became licenced to breed, research, trial and import cannabis. Additional $7m invested by two institutional investors (Biocann Investments Ltd and Fang Group Investments Ltd).
Waiapu Investments Limited is an investment company created by charitable company Hikurangi Enterprises Limited to enable members of our community and supporters everywhere to have a real stake in the ventures Hikurangi Group is developing.
Developing a registered medicine from cannabis that is grown, processed and licensed in New Zealand is a top priority and Waiapu Investments decided this would be the first project to receive investor funds from Waiapu Investments.
Panapa Ehau: Co-founder of Hikurangi Enterprises, Panapa grew up in Ruatoria and returned to the Coast five years ago with his young family after two decades of study, travel and business experience.
Sheryl Smail: Sheryl is a professional director, a chartered member of the Institute of Directors with broad governance experience, and has served on the boards of Tairāwhiti Polytechnic and EIT Tairāwhiti.
While Hikurangi Enterprises is the only shareholder with voting rights, the charitable company is offering most of the ownership in Waiapu Investments to East Coast residents and then the wider public via the PledgeMe equity crowdfundingplatform.
Over 3,000 people registered interest in the opportunity to own shares in Waiapu Investments. The minimum investment was $50 for 50 shares and the PledgeMe share offer in May 2018 raised $2.4 million from nearly 1,500 investors from around New Zealand.
Most of the funds raised through the crowdfunding offer were used by Waiapu Investments to buy shares in a joint venture with Hikurangi Bioactives Limited Partnership to produce medical cannabis products in New Zealand.
The board of Waiapu Investments aim to act in the best interests of the company and will have full authority to make decisions about how much, if any, funds to invest in specific projects including medical cannabis initially. There are usually other investors and co-owners also involved in each venture, sometimes Waiapu Investments may have the opportunity to appoint board members for the venture and other times it will be a completely passive shareholder.
Biotechnology, life sciences and natural health products development are high risk investments and while the rewards from developing novel treatments for health conditions can be large, there is a real risk that the investment made in science and clinical trials is not successful.
Equity crowdfunding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of business is very speculative and carries high risks. Investors may lose their entire investment, and must be in a position to bear this risk without undue hardship. New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for investors to make an informed decision. The usual rules do not apply to offers by issuers using this facility. As a result, investors may not be given all the information usually required. Investors will also have fewer other legal protections for this investment. Investors should ask questions, read all information given carefully, and seek independent financial advice before committing any funds.