Hygrovest continues to diversify its investment portfolio as cannabis sector underperforms

The company holds A$6 million of cash that will allow it to continue to diversify away from the underperforming cannabis sector.

Hygrovest Ltd (ASX:HGV) achieved some of its goals to diversify its investment portfolio, reduce its exposure to the cannabis sector and ultimately, reduce the difference between the share price and NAV, during the financial year ended June 30, 2022.

Some of HGV’s activities during the year included:

• realising underperforming and/or illiquid investments – HGV divested its investment in Entourage Health Corp to realise A$4 million and divested its unlisted investment in Embark Heath in exchange for shares in Canadian listed cannabis company, BevCanna Enterprises;
• advanced additional funds (C$2 million) to Weed Me, HGV’s largest investment, to roll out its 2022 business plan, which includes achieving a liquidity event during calendar 2022 that will provide HGV with the option of realising a material portion of its investment; and
• HGV invested A$2.5 million in companies outside the cannabis sector that provide the prospect of higher capital growth.

Despite many positive steps, the decline in the value of the listed Canadian cannabis sector during FY22 has been the biggest disappointment faced by HGV.

HGV’s cannabis investments generated most of the A$16 million decline in HGV’s NAV during the financial year.

On the bright side, the company holds A$6 million in cash that will allow it to continue to diversify away from the underperforming cannabis sector.