(Sharecast News) - Health, wellness and medical cannabis investor Seed Innovations announced a major sale on Monday, offloading 2,900 shares of Germany-based European medical cannabis enterprise Avextra, formerly known as Eurox Group.
The AIM-traded firm said the sale represented 56.4% of Seed's total holdings in Avextra, bringing in a gross amount of €2.9m (£2.45m).
Seed still held 2,242 shares in the company, amounting to 3% of Avextra's shares on a fully-diluted basis.
The board said the sale proceeds of €2.9m was a significant 62% return on Seed's initial investment made during 2021 and 2022.
Post-sale, Seed's cash position was poised to be around £4.6m, with additional cash receivables anticipated from the sale of another entity, Leap Gaming, which could amount to around £2.5m.
The combined cash and receivables, totaling £7.1m, made for a 38.9% increase over Seed's market capitalisation, which stood at about £5.11m as at 8 September.
As of the last publication, Seed's net asset value had valued Avextra at £4.44m, based on a per-share price of €980.
The recent sale, pegged at €1,000 per share, indicated a 2% premium to the earlier price per share.
Thus, the value of Seed's remaining shares in Avextra was about €2.24m, or around £1.9m.
"The opportunity arose for a partial exit of our Avextra holding and the board agreed that generating another £2.45m via a premium asset sale was the right decision," said Seed's chief executive officer Ed McDermott.
"The sale represents a 60% premium to our entry point which is pleasing, especially when prevailing market conditions are accounted for.
"We remain supportive shareholders of Avextra and appreciate the progress they continue to make along with their focus on meeting the needs of patients and healthcare professionals across Europe."
McDermott said that, as an agile fund that could adapt to movements in markets, Seed was looking to speed up the investment cycle and, where appropriate, seek full or partial exits within as close to a 24-month timeframe as possible.
"Current market conditions have created strong opportunities for investment companies with cash and, with the board's broad network and access to investment opportunities, we intend to utilise our cash and cash receivables balance of some £7.1m to invest in fast moving enterprises with excellent upside potential."
At 1119 BST, shares in Seed Innovations were up 16.01% at 2,79p.
Reporting by Josh White for Sharecast.com.
Seed Innov (SEED)