Palla Pharma boss Jarrod Ritchie stands in a field of poppy flowers near Cressy in Northern Tasmania.

Listed opiate grower Palla Pharma, the company formerly known as TPI Enterprises, was in the market on Thursday, seeking to raise $31.1 million by way of a placement and rights issue.

Shaw and Partners and Morgans Financial launched the fully underwritten deal to new and existing investors, offering shares in Palla at 70¢ each. The offer price reflected a 15 per cent discount to the theoretical ex-rights price.

It is understood major shareholders Washington H. Soul Pattinson, Alex Waislitz’s Thorney Opportunities Group and Simon Moore, Colinton Capital founder and the former country head of private equity giant Carlyle Investments, will participate in the raising.

Palla Pharma shares were placed in a trading halt on Thursday. The stock last traded at 90¢.

The Jarrod Ritchie-led company plans to use the new funds for growth capital to expand production capacity, and to reduce debt.

Unlike rival Tasmanian Alkaloids which produces cannabis resin, Palla Pharma is sticking to opiates and its hard-fought-for strategy as a pharmaceuticals manufacturer.

The $72 million company, which listed as TPI in 2015, is fully vertically integrated from the poppy farm to the pharmacy. Its attraction to investors has been that it has developed a process that manufactures product significantly cheaper than its competitors.

Palla’s tech uses water to make opiate pills and needs just 50-60 people to make 80 tonnes of product a year, compared to 100-150 people.

It's one of just three growers and processors in the country and the only one that operates outside of Tasmania.

Article source: AFR, 17 October 2019