Verdant PhytoMed — Funding Strategy & Exit Options
The Company’s capital structure has been designed to optimise the weighted average cost of capital (WACC) while maintaining financial flexibility and minimising dilution for founding shareholders:
Section 11 · Business Plan
Funding Strategy & Exit Options
The Company’s capital structure has been designed to optimise the weighted average cost of capital (WACC) while maintaining financial flexibility and minimising dilution for founding shareholders:
On an 8x Year-5 EBITDA multiple, delivering a ~28% IRR with exit options including trade sale and strategic acquisition.
11.1 Capital Structure
The Company’s capital structure has been designed to optimise the weighted average cost of capital (WACC) while maintaining financial flexibility and minimising dilution for founding shareholders:
| Source | Amount (ZAR M) | Terms |
|---|---|---|
| Equity — Founders | 0 (Sweat equity) | Services-in-kind; 4-year vesting |
| Equity — Orion Capital Partners | 84.0 | 30% stake; Board seat; anti-dilution protection |
| Senior Debt — Development Finance | 36.0 | IDC/DBSA; 7-year term; 12% p.a.; 18-month grace |
| Total Funding | 120.0 |
11.2 Investor Governance Rights
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Board representation: One non-executive director seat for Orion Capital Partners
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Quarterly financial reporting in accordance with IFRS
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Annual independent audit by a Big 4 or mid-tier audit firm
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Veto rights on material transactions exceeding ZAR 5 million
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Tag-along and drag-along provisions in the shareholders’ agreement
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Pre-emptive rights on future equity issuances
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Information rights including monthly management accounts and operational KPIs
11.3 Exit Options
The Company anticipates providing investors with liquidity within a 5–7 year horizon through one or more of the following exit mechanisms:
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Trade Sale: Sale to a multinational pharmaceutical or cannabis company seeking African production capacity. Comparable transactions in the sector have been executed at 8–12x EBITDA.
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Strategic Acquisition: Merger with or acquisition by a vertically integrated cannabis group seeking EU-GMP certified African supply.
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Initial Public Offering (IPO): Listing on the Johannesburg Stock Exchange (JSE) AltX board or a secondary listing on a cannabis-focused exchange (e.g., Canadian Securities Exchange).
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Secondary Sale: Sale of the institutional investor’s stake to a private equity fund or family office via a structured secondary transaction.
11.4 Dividend Policy
No dividends are anticipated during Years 1–4 as free cash flow is reinvested in capacity expansion and debt repayment. From Year 5, subject to Board approval and liquidity requirements, the Company targets a dividend payout ratio of 15–25% of net profit.
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