Marijuana real estate lender AFC Gamma to raise up to $105M in IPO

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(This story has been updated to correct the amount of the capital raise.)

Marijuana industry real estate investment trust Advanced Flower Capital, also known as AFC Gamma, is planning an initial public offering on the Nasdaq exchange that’s intended to raise approximately $91 million to $105 million.

The offering would involve the sale of 5.56 million shares of common stock in AFC Gamma, or roughly 47% of all the company’s common stock, at a price of $17-$19 per share, according to a prospectus dated Feb. 2.

An over-allotment option would offer up to 833,333 additional shares.

West Palm Beach, Florida-based AFC Gamma, founded in July 2020, offers loans to established cannabis companies in states where marijuana is legal for medical or recreational use.

“Due to the capital constrained cannabis market which does not typically have access to traditional bank financing and faces limitations on accessing equity markets, we believe we are well positioned to become a prudent financing source to established cannabis industry operators given our stringent underwriting criteria, size and scale of operations and institutional infrastructure,” AFC Gamma noted in the prospectus.

The company had roughly $92.5 million in outstanding loans to eight borrowers as of Dec. 26, with commitments “to approximately $19.8 million in additional loans and commitments from existing loans, with approximately $485.2 million of potential loans actively under review in our pipeline,” according to the prospectus.

AFC Gamma expects to net approximately $91 million from the IPO, or as much as $105 million if the over-allotment option is fully exercised, based on an $18 IPO price.

The company would use the proceeds to repay outstanding borrowings, fund its current $19.8 million loan commitments and originate new loans as well as for working capital and other general corporate purposes.

AFC Gamma raised $80 million for loans last August, then loaned $22 million to Pennsylvania-based Organic Remedies in November.

The company’s proposed Nasdaq symbol would be AFCG.