Óskare Fund seeks long-term returns from medical use of marijuana
An Irish-French venture has launched Ireland’s first alternative fund seeking long-term returns in the cannabis industry.
The private equity Óskare Fund is offering private investors the chance to put at least €100,000 into a portfolio based on the research, development and sale of cannabis-based products - but only for medicinal purposes.
Investors over the past year have plowed billions into such funds in North America in line with the growing legalisation there of cannabis for both medical and recreational purposes. In January, an exchange-traded fund (ETF) focussed on medical cannabis firms and managed by Canada’s Purpose Investments listed on the Irish exchange.
But the Óskare Fund - being offered by Irish firm Crossroads Capital Management and France-based cannabis investment specialist Óskare Capital with advice from Eversheds Sutherland - has become the first such fund to be domiciled here. The Central Bank approved the scheme last month.
The Óskare prospectus describes the fund as “a long-term, potentially high-risk investment which is suitable only for sophisticated institutional and high-net-worth investors which are able to bear the risk of losing the entirety of the value of their shares”.
It specifies that the closed-end fund would seek €30m in its initial round and up to €120m more in successive rounds. Terms require investors to commit their money for at least four years.
The Óskare-Crossroads strategy is to invest primarily “in unlisted cannabis-related companies” with “a broad global exposure to the cannabis industry”.
These include, it said, firms that “perform lawful research on the medical, technological and pharmaceutical applications of marijuana and cannabis extracts” and those that “produce and develop devices, goods and equipment related to the cannabis industry, including hemp and its legal derivatives”.
The fund seeks stakes and boardroom representation on early stage firms in the medicinal cannabis space, but will not invest directly in any growers. Its planned investments will be weighted in favour of enterprises based in Europe.
Paris-based Óskare - named after the Mohawk term for cannabis - said Europe “enjoys the best regulatory environment for innovation and for research and development in medical and therapeutic cannabinoids”.
It said legal medical cannabis sales in 2018 reached €316m, are experiencing high double-digit growth - and could produce a continent-wide market by 2024 topping €2.6bn and €14bn by 2029.
Deborah Hutton, partner and head of the asset management and regulatory team at Eversheds Sutherland in Dublin, said the firm had established a “cross-practice cannabis industry team primarily to help our clients navigate the regulatory uncertainty in this rapidly growing industry”.
She said the Óskare Fund was currently “unique” here but was likely to face more local competition.
“Dublin is one of the world’s largest venues for managed funds and particularly for the more unusual asset classes,” she said. “The potential for this kind of investment is massive.”