U.K. Takes Stakes in Cannabis and Yacht Companies in Pandemic

(Bloomberg) -- The U.K. government has become a part owner of a medical cannabis company, a yogurt bar business and a yacht charter firm after another 75 emergency start-up loans made during the pandemic converted into shares.

Grass & Co., which makes cannabidoil health products from the non-intoxicating chemicals found in hemp, was among the latest set of companies in which the government’s Future Fund declared an equity stake.

The Future Fund was set up during the pandemic to provide equity-style finance to established start-ups. The program ended up making 1.14 billion pounds ($1.43 billion) of convertible loans to 1,190 companies. The latest disclosures take the total number of firms whose loans have converted to equity to 335.

Grass & Co. is a mail-order CBD company whose products promise relief from anxiety. They’re stocked at on high streets at the retailer Holland & Barrett. 

Among the other businesses whose loans have converted are Yaar, a yogurt bar business; Borrow a Boat, a yacht charter firm; Gipsy Hill Brewing Co., a south London craft beer maker; BUZZ Bikes, a bicycle hire business; and Under the Doormat, a concierge Airbnb-type service.

The government has already revealed it has a stake in Bolton Wanderers, a third-tier U.K. football club, and has come under fire for what has appeared to be a strangely eclectic mix of investments that often look more like small businesses than venture-capital backed start-ups.

However, the loan conversions suggest the Future Fund is proving successful. Under the terms of the program, the 8% loans convert after three years or at the point of new capital investment. All 335 companies in which the state has a stake have raised private sector capital through an equity funding round.

Other businesses in which the government is now a shareholder include Epsilogen, a London-based developer of therapeutic antibodies to treat cancer, and nDreams, a virtual reality games developer. The Future Fund is part of the state-backed British Business Bank.

Ken Cooper, managing director of venture Solutions at the British Business Bank said: “The Future Fund was created to increase the flow of capital to companies at the height of the pandemic, while ensuring long-term value for the U.K. taxpayer. We’re delighted to see this flow of companies going on to raise further private sector capital.”

“As a shareholder in these businesses, the Future Fund is well positioned to share in the benefits of their continued growth.”

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