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TAAT Global Alternatives (CSE:TAAT / OTCQX:TOBAF / FRA:2TP) has received a further private placement for CAD 10,000,000 into the company from Horizon Ventures, the Hong Kong-based venture backer of innovative businesses. TAAT, the maker of a non-nicotine, non-addictive alternative to tobacco for existing smokers, has already received CAD 6.75m from a group of investors under the Horizon Ventures umbrella.

Add this to the allotment of common share purchase warrants voluntarily exercised by the investors, and Horizon has now backed TAAT to the tune of CAD 26.7m.

Horizon Ventures, led by Debbie Chang, is best known as an investment vehicle for Hong Kong tycoon Li Ka-shing. It is a venture capital business which supports the growth of disruptive technologies across a number of different sectors. Among its most successful ventures is Facebook, Spotify, Siri (now acquired by Apple) and Zoom Video Communications.

Li has a net worth of approximately $31bn and is ranked as the 24th richest person in the world. Horizon Ventures took part in at least 22 financing rounds in the course of 2020, with a total outlay estimated in the region of  USD 1.6bn. The secret to its success is its ability to single out companies with huge growth potential based on disruptive technology.

Target market worth US$814 billion

“It is a wonderful validation for such prolific investors to be making a follow-on investment into TAAT as we continue our entry into the USD $814 billion global tobacco industry, with multiple international expansions already underway,” said Setti Coscarella, CEO of TAAT. “The investors’ initial investment in 2020 was instrumental to us reaching several of the milestones we have attained so far.”

The most recent placement by Horizon Ventures in TAAT was conducted at the $3 level, which is 130% higher than the investment the group under Horizon made into TAAT back in October last year.

The backing of Horizon Ventures has been critical to TAAT’s ongoing expansion in the US and in Europe. Products are now available in the US in over 1000 retail outlets and online. But the latest round of financing also confirms the support that Chang and her associates have for the company’s business model and its progress to date.

Massive growth in sales in US market

Regular readers of The Armchair Trader will know that TAAT has upgraded its common shares to the OTCQX Best Market in the US and its shares are now part of the CSE 25 index. The company has continued to see substantial growth over the course of the last year, including quadruple digit organic growth on a year-on-year basis (according to Q3 2021 financial results). TAAT managed to double its sales to US$1.3m between its Q2 and Q3 announcements, illustrative of just how fast the company is growing.

Horizon Ventures has a reputation of being a long term, strategic backer of companies. Now TAAT’s biggest shareholder, its ongoing involvement will allow the company to embark on a further program of brand building and the expansion of its distribution network, in the US, and in Europe and Australia. It will also allow TAAT to upgrade its production capability as it continues in this hyper-growth phase.

TAAT’s core Beyond Tobacco product is seen as a means for smokers to kick the smoking habit without resort to nicotine based solutions. Just focusing on existing smokers, TAAT is accessing a huge global market. China alone is estimated to have around 300m smokers.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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