Fri, May 25, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Private Equity Strategies

Dealmakers Q&A: MedMen eye second fund

Friday, September 29, 2017

By: Bailey McCann, Private Equity Strategies

Los Angeles, California-based cannabis-focused investment firm MedMen is eying its second fund. The firm is targeting $250 million for investments in cannabis assets.

MedMen's investor base is largely high net worth individuals and family offices, but the firm has also had some institutional interest. MedMen partnered with Chicago-based Wicklow Capital, a venture capital firm, for investments from its first fund which closed on just under $100 million earlier this year. Wicklow Capital is backed by Dan Tierney, the co-founder and former board member of GETCO, a Chicago-based high-frequency trading firm, now known as KCG Holdings following GETCO's acquisition of Knight Capital in 2013. MedMen typically invests between $1-40 million per transaction and made seven investments from its debut fund.

Unlike other cannabis industry investors that are focused on investing in existing consumer distributors, MedMen invests in raw assets. The firm is looking for opportunities to buy licenses or cannabis assets that they can then turn into an enterprise. MedMen operates by using a management holding company model, so they are the owners of each entity in the portfolio, rather than simply investing in several companies.

"We made a strategic decision to be very hands-on with development," MedMen co-Chairman and Partner, Chris Leavy tells Private Equity Strategies. Leavy oversees the investment strategy for the firm. Prior to joining MedMen, Leavy spent more than two decades on Wall Street, holding senior management roles at Morgan Stanley, OppenheimerFunds, and BlackRock.

According to Leavy, the development model MedMen uses is more resource intensive, but it allows the firm to be a prime mover in the still nascent industry. "We are working on everything from regulatory, to site selection, to bringing in people with relevant experience," he explains. "Many people look at us as a pot business, but we are largely working with experts from other fields including agriculture, chemistry, consumer marketing, finance. We are creating a new industry."

MedMen has an established presence in states that allow medical marijuana and is expanding its footprint into emerging medical markets including Massachusetts, New York, and Nevada.

In some ways, the firm operates like a large mid-market specialist private equity manager. Because of the focus on a single industry, Leavy and the investment team can take advantage of common private equity scaling practices like group purchasing, group marketing, and supply chain optimization. For Leavy, that model is key to MedMen's growth prospects because he says, it creates standardization and opportunity in an otherwise inefficient and fragmented market. "We're still early enough into the development of the industry that people are trying a lot of different models," he says. "This isn't available in every state. So if we can come in and build scale, there is opportunity for us there."

 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies


Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Hedge funds hike Smurfit Kappa positions amid takeover deal hopes, Hedge fund IBV Capital digs deep to unlock long-term value in a competitive market, Eisman of 'The Big Short' fame recommends shorting Deutsche Bank[more]

    Hedge funds hike Smurfit Kappa positions amid takeover deal hopes From Irishtimes.com: Two US hedge funds, Davidson Kempner and York Capital, have accumulated a combined 4.74 per cent interest in cardboard box maker Smurfit Kappa using financial derivatives. It comes as many investors cl

  2. Foundations of hedge fund managers gave big to controversial donor-advised funds[more]

    In the world of philanthropy and tax-deductible charitable giving, the explosion of donor-advised funds has touched off intense debate. Now, there is evidence that the DAF boom is being further fuelled by hedge fund foundation money. Four of the top five foundations that gave the most to large do

  3. Third Point to raise $400 million for SPAC, Farley to run it[more]

    From Reuters.com: Daniel Loeb's hedge fund Third Point LLC plans to raise $400 million for a "blank check" company which will be run by outgoing stock market operator NYSE Group President Thomas Farley, according to a regulatory filing made on Tuesday. The new company, referred to on Wall Stre

  4. Study: For hedge funds, smaller is better[more]

    From Institutionalinvestor.com: The smaller the hedge fund is, the better its performance is likely to be, according to a new study. The study - "Size, Age, and the Performance Life Cycle of Hedge Funds," released April 26 - sought to determine whether a hedge fund's size and age had any effect on i

  5. Hedge fund returns rose in April for first gain since January[more]

    From Bloomberg.com: Bloomberg Hedge Fund Database shows returns flat this year - Currency strategies had the biggest monthly gain at 13% Hedge fund returns increased 0.78 percent in April, reversing two consecutive monthly declines. The swing of 134 basis points was driven by gains in all seven