Australian-owned poppy processing company TPI Enterprises is planning to raise $35 million in fresh capital and list on the Australian Securities Exchange through stockbroker Wilson HTN with a value of over $200 million.
Image credit: tpienterprises.com
According to The Australian, the company expects to be backed by its biggest investors that include Washington Soul Pattinson and the Ashok Jacob-led Ellerston Capital to help bankroll its planned poppy crop expansion in Tasmania, Victoria, the Northern Territory and Portugal, which will almost triple the size of the company’s poppy plantations.
The TPI capital raising will take the funds raised from its heavyweight shareholders, which also include fund managers Allan Gray and Acorn Capital, over the $100 million mark.
This will be the company’s first raising since last year’s crucial regulatory changes, which saw Victoria and Northern Territory governments introduce new laws allowing for the commercial growing, processing and supply of legal narcotics.
The new legislative changes broke Tasmania’s 43-year opium poppy monopoly and allowed for expanded cultivation of the narcotic crop to the mainland.
“While the industry is growing globally, the Australian part, which comprises 50% of the whole industry, has been limited in its growth opportunities because it was constrained to Tasmania,’’ said TPI chief executive Jarrod Ritchie.
“That has been the key factor that has restricted our business — Tasmania has had some adverse weather events and not being able to source from other places has constrained our growth. Now that has opened up, our technological advantage means we can really complete globally. Now we have got that supply we have got the confidence to go out and raise additional capital to fund that growth.”
TPI is planning to plant 120ha of poppies Tipperary station in the Northern Territory, 3000ha in Victoria, up to 3000ha in Tasmania and about 700ha at a site in Portugal.
“So we will have gone from 2500ha only in Tasmania to closer to 7000ha from four different supply chains in our first year after the legislative changes,” he said, noting the market capitalisation of the company after the raising would be around the $240 million mark.
“This really is to underpin the growth in our supply chain and our manufacturing expansion. In any company’s life cycle there comes an opportunity when having access to liquidity is important. It is part of our evolution.”
Opium poppy sap is rich in morphine, thebaine and codeine, which are the primary ingredients in a string of pain-relief medicines.
The company, which is currently unlisted and has more than 140 shareholders, purifies poppy straw into a white powder known as narcotic raw material, which it exports to drug companies in the US, Europe and Africa.
