Peter Thiel-Backed Fund Hits the Jackpot With $12 Billion Tilray Stake

By Brandon Kochkodin , Jen Skerritt , and Craig Giammona

The massive surge in pot stock Tilray Inc. has delivered a multi billion dollar windfall for a little-known private equity fund backed by investor Peter Thiel.

Privateer Holdings Inc., a Seattle-based fund started seven years ago to focus on the marijuana business, holds 76 percent of Tilray, a stake now worth more than $12 billion after the stock soared more than 10-fold from its July public offering.

Tilray, a Canadian company with just $20 million in revenue last year, has benefited from the surge in demand for pot stocks as Canada gears up to legalize the drug next month, and companies including Coca-Cola Co. and Diageo Plc show interest in the sector.

Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’ $75 million Series B financing round in December 2014, according to the company’s website.

Crypto-like Craze

Thiel, 50, was an early investor in Facebook Inc. and is known for making unconventional investments in different industries. Founders Fund has also backed Airbnb Inc., Lyft Inc., Space Exploration Technologies Corp. and Palantir Technologies Inc.

Tilray, based in the Vancouver Island town of Nanaimo, has drawn more interest than most pot stocks, in part due to its listing on the Nasdaq, making it easier for U.S. investors and hedge funds to get a piece of the action. The limited number of shares available for trading may also be adding to the volatility, making it more expensive for skeptical investors to short the stock.

Citron Research said it remains short on Tilray, calling the stock’s surge “beyond comprehension” in a Tweet Wednesday.

Bigger Than American

Tilray has now surpassed Canopy Growth Corp. as the world’s largest cannabis company. Canopy, which added a New York listing to its Canadian trading in May, is worth $12 billion.

Tilray jumped as much 55 percent to in New York Wednesday to $240, giving it a value of more than $20 billion, higher than American Airlines Group Inc. Cowen & Co. took the company public in July at $17. The stock closed up 38 percent at $214, after a late swoon and partial recovery.

Rocket Ride

Brendan Kennedy, Michael Blue and Christian Groh founded Seattle-based Privateer in May 2010 and the firm later invested in Tilray. The trio effectively owned about 45 percent of Privateer’s holdings in Tilray as of March 31, according to the cannabis company’s prospectus. The Privateer founders’ stake in Tilray was valued at $7.9 billion as of 12:15 p.m. in New York, giving each a net worth of at least $2.6 billion, assuming they hold equal stakes.

When Tilray’s unlisted Class 1 shares are included, Privateer’s holdings rise to almost 75 million shares, worth more than $15 billion.

Kennedy, 46, serves as Tilray’s chief executive officer. Kennedy and Blue are both graduates of Yale School of Management’s MBA program, while Kennedy and Groh worked together at SVB Analytics, a non-bank affiliate of Silicon Valley bank.

Tilray, which has agreements to sell pot in Canadian pharmacies including Shoppers Drug Mart, has ambitious plans well beyond Canada. It’s focused on medicinal marijuana in 12 countries that span five continents.

“Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis that patient should be able to obtain a Tilray product. That’s our global goal,” Kennedy said in an interview this week from New York.

Tilray is investing in production capacity in Portugal so it can supply products to the EU from within Europe, he said. The company also has its High Park brand for the recreational market in Canada, which has secured supply agreements with seven provinces and territories, Kennedy said. The company also has a deal to develop medicinal cannabis with the Canadian division of Novartis AG of Switzerland.

Kennedy said he’s not interested in getting taken over by a large consumer company. In a testament to the euphoria surrounding the space, he claimed the company may one day be worth more than $100 billion.

“I don’t want to get bought by AB-InBev or Diageo, I want to be that company,” he added.

— With assistance by Tom Metcalf, and Reade Pickert

(Updates with value of stakes held by founders of fund.)

Article source Bloomberg

Peter Thiel-Backed PE Fund’s Tilray Stake Soars to $12B

By Shoshanna Delventhal

Shares of Tilray Inc. (TLRY) skyrocketed this week after the British Columbia-based company announced it received an approval from the Drug Enforcement Administration (DEA) to import marijuana to the United States for medical research. Since hitting the U.S. public market on the Nasdaq with an initial public offering (IPO) price of $17 in July 2018, Tilray shares have risen in excess of 1,300%, compared to the S&P 500’s 3.3% return over the same period. Tilray’s recent surge has led the company to surpass Ontario, Canada-based Canopy Growth Corp. (CGC) to become the world’s largest cannabis company with a market capitalization at roughly $14.4 billion.

(See also: Tilray Receives DEA Nod For Pot Imports For Medical Research.)

Thiel-Backed Fund Sees Big Gains

Tilray’s rally has lined the pockets of a Seattle-based private equity fund backed by billionaire entrepreneur and angel investor Peter Thiel. An early investor in cannabis ventures, Privateer Holdings, holds a 76% stake in Tilray, now worth approximately $12 billion, as reported by Bloomberg. When including Tilray’s unlisted Class 1 shares, Privateer’s stake rises to almost 75 million shares, worth nearly $15 billion.

In December 2014, Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holding’s $75 million Series B funding round, according to the private equity firm’s website. Thiel, who founded e-payments pioneer PayPal Holdings Inc. (PYPL) in the 90’s, is known for his bold investments, backing industry disrupters such as Facebook, sharing economy giant Airbnb, Elon Musk’s aerospace company Space Exploration Technologies Corp., and ride-sharing platform Lyft Inc. (See also: Top Marijuana Private Equity and Venture Capital Funds)

Tilray Burns Short Sellers

While Tilray posted just $20 million in revenue for 2017, bulls view the expected legalization of cannabis in Canada and new interest in the weed market from blue chip consumer companies like Coca-Cola Co. (KO) and Diageo Plc. (DEO) as representing long-term revenue growth opportunities. In a recent interview in New York, Chief Executive Officer (CEO) Brendan Kennedy indicated that rather than being taken over by a larger corporation, he envisions his company warranting a $100 billion market value on its own, as reported by Bloomberg.

Tilray currently focuses on medicinal marijuana in 12 countries across five continents. In Canada, the firm has inked deals with pharmacies such as Shoppers Drug Market to sell its cannabis products.

“Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis that patient should be able to obtain a Tilray product. That’s our global goal,” said Kennedy told Bloomberg.

Not all are so bullish on the Canadian weed producer. Prominent short seller Citron Research stands firm in its bet against Tilray, writing that the stock’s valuation is “beyond comprehension” in a tweet on Wednesday.

Tilray shares are up 52% as of Wednesday afternoon at $268 per share. Short sellers have been burned by the stock’s recent strength, as the limited number of its shares also add to the stock’s volatility.

Article source Investopedia

How Peter Thiel Made A Killing In Tilray

The momentum stock du jour – Tilray – has captivated trader attentions ever since its IPO at $17 in July, following which it has catapulted in what has been a relentless parabolic fashion. And while most know the general story behind the Canadian pot company, what may come as a surprise is that Tilray CEO Brendan Kennedy’s Privateer Holdings, holds more than 58 million of the total 76 million shares outstanding, a stake now worth more than $12 billion after the stock soared more than 10-fold from its July public offering. And, according to Bloomberg, when Tilray’s unlisted Class 1 shares are included, Privateer’s holdings rise to almost 75 million shares, worth more than $15 billion.

The curiously low float – together with a painful short squeeze – is one of the reasons behind the stock’s tremendous move. As Bloomberg notes, the limited number of shares available for trading is also be adding to the volatility, making it more expensive for skeptical investors to short the stock. That however has not daunted the skeptics such as Citron Research, which earlier on Wednesday said it remains short on Tilray, calling the stock’s surge “beyond comprehension” in a Tweet Wednesday.

However, what even fewer know is that one of the biggest winners from Tilray’s explosion, is none other than Peter Thiel who is an investor in Privateer.

Privateer’s partners include Brendan Kennedy, 46, who serves as Tilray’s chief executive officer, Michael Blue and Christian Groh. Kennedy and Blue are both graduates of Yale School of Management’s MBA program. Kennedy and Groh both formerly worked together at SVB Analytics, a non-bank affiliate of Silicon Valley bank.

Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer Holdings’ $75 million Series B financing round in December 2014, according to the company’s website. That stake may now be approaching (or has surpassed) $1 billion.

And as investors were counting their profits, Tilray surpassed Canopy Growth as the world’s largest cannabis company, with a market value of more than $20 billion. Canopy, which added a New York listing in May, is worth only $12 billion. Tilray jumped another 50% to $230, giving it a value higher than American Airlines Group.

As Bloomberg adds, Tilray, which has agreements to sell pot in Canadian pharmacies including Shoppers Drug Mart, has ambitious plans well beyond Canada. It’s focused on medicinal marijuana in 12 countries that span five continents.

“Our long-term vision is if a patient walks into any pharmacy in any country in the world that has legalized cannabis that patient should be able to obtain a Tilray product. That’s our global goal,” Kennedy said in an interview this week from New York.

Tilray is investing in production capacity in Portugal so it can supply products to the EU from within Europe, he said. The company also has its High Park brand for the recreational market in Canada, which has secured supply agreements with seven provinces and territories, Kennedy said. The company also has a deal to develop medicinal cannabis with the Canadian division of Novartis AG of Switzerland.

Kennedy said he’s not interested in getting taken over by a large consumer company. “I don’t want to get bought by AB-InBev or Diageo, I want to be that company,” he said. In a testament to the euphoria surrounding the space, he claimed the company may one day be worth more than $100 billion.

At this rate of appreciation, it will hit that price in just a few weeks.

Article source Zero Hedge