Aurora Cannabis files base shelf prospectus
On April 2, Aurora Cannabis (ACB) filed a preliminary base shelf prospectus with respective regulators in Canada and the US. Filing the base shelf prospectus doesn’t mean that the company is going to raise capital immediately.
Aurora Cannabis outperforms
In the above chart, you can see that Aurora Cannabis has outperformed the benchmark Horizons Marijuana Life Sciences ETF (HMMJ). Aurora Cannabis had a return of 78%, while HMMJ had a return of 51%.
If the company wants to expand in the future, it would be able to quickly pull the trigger and raise the capital it needs. Filing the shelf prospectus allows Aurora Cannabis to do all of the heavy lifting beforehand. When the company needs to raise capital, it can do so at short notice. “Preliminary” refers to the first draft of the prospectus filed with regulators. In the press release, Aurora Cannabis stated that “we have no immediate intention of drawing capital against this Shelf Prospectus.”
Why file this prospectus?
The cannabis industry is fast moving with intense competition. Companies including Canopy Growth (WEED), Cronos Group (CRON), Aphria (APHA), and others are moving to grab a piece of the market (HMMJ) share. The sector is ripe for consolidation. Every day, we hear about new acquisitions or partnerships formed among industry players. When a company spots an opportunity and if it’s synergistic, the last thing it would want is to get stuck at the financing stage, which could take a long time. The filing makes sure that Aurora Cannabis will be able to quickly raise capital if the opportunity is right.