The story behind Cellular Goods’ IPO
On February 26, 2021, Cellular Goods, a company that makes products formulated with engineered cannabinoids, listed on the London Stock Exchange (LSE), making it the first ever manufacturer of cannabinoid-based products to list on London’s main market.
Cannabinoids are compounds found in cannabis plants that are legal in the UK and are commonly used in skincare and pharmaceutical products.
In the 18 months leading up to its IPO, Cellular Goods worked closely with UK regulator the Financial Conduct Authority to showcase that it was doing everything in both a legal and compliant manner.
As the firm was the first of its kind to list on the LSE, its journey would not be as straightforward when it came to selling its story to the investment community. ‘There was a lot of confusion around the difference between cannabis, CBD and cannabinoids,’ says Alexis Abraham, the company’s founder and CEO.
The motivation behind Cellular Goods launching an IPO was driven by the cannabinoid sector gaining momentum, but a lot of work was needed for investors and regulators to understand the sector.
‘Fulfilling a stock exchange standard would instill investors with confidence and enable us to attract the best talent and partnerships, as well as the capital we need as we continue our journey,’ Abraham explains.
The company launched its IPO mid-way though the Covid-19 pandemic. Following several hours spent on various virtual video platforms with teams in London and Canada, it finally found itself at the virtual roadshow, taking 10 meetings per day for more than 10 days.
‘I think it’s something that brings with it opportunities,’ Abraham says. ‘It gives you the chance to finesse and stage-manage every aspect of it. On the other hand, it’s exhausting: as people have discovered during the pandemic, Zoom calls and Microsoft team calls seem to be much more demanding of the participants, given the constant attention required.’
That video technology also gave the whole team the opportunity to participate in the opening bell ceremony, however. ‘We got a direct feed for the entire team, and those who are closely involved were able to watch as the shares started trading on the open market,’ Abraham recalls.
On the day of the IPO, Neil Thapar, investor relations contact at Cellular Goods, says ‘the share price ended up being at a substantial premium because of the interest an innovative new company creates.’
Abraham says there was a large cohort of individual investors who bought between £500 ($688) and £2,000 worth of shares pre-IPO and were able to buy at the same price as institutions. ‘I think the interest and demand were things that gave us all a lot of excitement,’ he adds. ‘It was great to have our belief in the sector validated by both the public and institutional investors.
‘For a company like ours, it’s fantastic to be able to potentially combine both your investors and people who may be interested in the product your company makes. On the other hand, it requires a lot of care and attention when dealing with this large a number of smaller investors.’
Since launching the IPO five months ago, the company has grown more than expected. ‘We originally set out with a goal to raise a certain amount of money to grow the business but, because of the successful IPO, the company was able to raise substantially more than what it originally anticipated,’ Thapar says, noting the firm’s ‘proud feeling’ at being one of the ‘first companies in this industry to get the approval and credibility of being on the LSE.’
