Tilray popped 24 percent Friday after its largest shareholder, a private equity fund backed by Peter Thiel, said it will not sell any of its remaining stake following the expiration of the marijuana grower’s IPO lockup period next week.
according to the Securities and Exchange Commission.
Though there are more than 76 million Tilray shares outstanding, the public markets have access to only 23 percent of the total equity, about 17.8 million shares. Further, of those 17.8 million floating shares, more than 21 percent had been sold short as of Jan. 10, according to FactSet.
Blue added that should Privateer ever decide to distribute shares, it will do so “in an orderly and deliberate manner to maximize tax-efficiency considerations for Privateer investors, while also taking into consideration potential impacts on Tilray’s public float.”
The main objective of such IPO lockups is to dissuade early investors from flooding markets with their shares as retail investors start to buy equity. Such a move by large early investors could depress and create extraordinary volatility for a newly public company. Tilray’s lockup period expires Tuesday.
Founded in 2013, Tilray was incorporated under CEO Brendan Kennedy’s cannabis-focused private equity venture Privateer Holdings. Billionaire investor Thiel’s Founders Fund became the first institutional investor in the cannabis industry through Privateer’s $ 75 million Series B financing round in December 2014, according to the company’s website.
Privateer announced last year that it raised $ 200 million to invest in cannabis brands.