RIV Capital (TSXV:RIV) is a venture capital firm specializing in cannabis. The company identifies strategic counterparties seeking financial or operating support and provides investor returns through dividends and capital appreciation. RIV Capital also generates interest, lease, and royalty income to finance employee compensation, professional fees, and other general and administrative costs associated with operating the business to generate these returns.
Domestic and international companies in the cannabis industry currently face obstacles in securing appropriate growth capital and strategic support. The company’s business strategy is to create shareholder value through the continued deployment of strategic capital throughout the global cannabis sector. The company pursues investments with domestic and international counterparties in various verticals across the cannabis value chain.
Further, the company regularly pursues new domestic and international investments with a focus on creating an ecosystem of diverse and complementary cannabis companies that represent various verticals of the cannabis value chain and that it believes are well positioned to become leaders within respective niches. RIV Capital aims to develop a diversified portfolio in terms of both the types of companies in which it is invested and the types of structures used in these investments.
The company’s investment team of qualified financial and technical professionals carefully selects appropriate investment candidates and potential transaction structures. Structures include common and preferred equity, debt, royalty, joint venture, and profit-sharing agreements, among others. Upon identifying an investment candidate, the company’s advisors conduct financial, commercial, operational, and legal due diligence before bringing the potential investee into the company’s ecosystem.
Innovative financial structures
To date, RIV Capital has made investments through a variety of financial structures in 20 companies, including seven investees with international operations, and has established a diversified portfolio of investments. The company’s portfolio includes large-scale greenhouse cannabis cultivators, small-scale premium cannabis cultivators, agriculture-technology companies, international hemp processors, brand developers, retail distribution licence operators, data, software, other technology platforms, beverage companies, and beauty brands.
The result is an ecosystem of complementary companies operating throughout the cannabis value chain and ancillary markets. As the company’s portfolio continues to develop, each constituent benefits from opportunities to collaborate with among other portfolio companies, which RIV Capital believes results in an ideal environment for innovation, synergy, and value creation for the company’s ecosystem.
Pipeline of opportunities
The company evaluates investments in both the domestic and global cannabis sector, and the geographic composition of RIV Capital’s investment portfolio reflects the global nature and constitution of the cannabis industry. The company has access to a pipeline of domestic and global cannabis companies seeking alternative financing solutions and strategic support.
Following identification of a possible investment candidate, the company conducts significant and detailed financial, commercial, operational, and legal due diligence, using both RIV Capital’s internal team of qualified professionals as well as external advisors and counsel as required. In addition to financial support, the company offers operational support to the investees in RIV Capital’s ecosystem. This support is investee-specific depending upon the needs of each investee and should enhance long-term shareholder value.
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Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.