JUUL LABS QUIETLY CONSIDERING OVERSEAS FINANCING ROUND

Josh Kosman
May 21, 2019
New York Post

Juul Labs is opening its books to overseas investors as it looks to raise cash ahead of a global growth spurt, The Post has learned.

The e-cigarette maker — whose wildly popular vaping devices have helped create a nicotine “epidemic” among US teens, according to federal regulators — has invited sovereign funds including Singapore’s GIC Private Ltd. to examine its financials, sources said.

In December, privately held Juul was valued at $38 billion, or $249 a share, when tobacco giant Altria took a 35% stake in the company. Now, Juul is hoping for a valuation north of $300 a share — or more than $45 billion, according to sources close to the talks.

Although the latest talks are preliminary, one insider indicated that Juul is angling to raise as much as $10 billion in cash. The source noted that Juul isn’t looking to sell the new stake to fund growth, but rather to generate a massive dividend for existing investors.

Nevertheless, insiders said that in selecting investors, Juul will be looking for overseas connections that can help Juul expand its distribution.

“Europe and Asia will drive significant growth,” a source who advises Juul investors said. “They are only reaching out to sovereign funds and big-money investors.”

Insiders cautioned that Juul hasn’t yet formally decided whether to launch a financing round. Although the San Francisco-based startup has recently been working with JPMorgan on financing alternatives, a new adviser could soon be named, according to a source.

A source added, however, that Juul would not be going through the process if it did not think it would succeed.

“That’s classic VC fundraising,” one of the sources said. “You’ll try to raise money and take it if it comes at the right valuation.”

Last week, The Post reported exclusively that Capital Reinsurance, a unit of the hedge fund Capital Group, recently bought Juul shares on the secondary market for more than $300 a share, nearing a $50 billion valuation.

The seller of those shares was Fidelity Investments, an early Juul investor, sources told The Post on Tuesday.

“Fidelity has made a killing in this,” a source said, adding that Fidelity is now largely out of its Juul investment.

Marlboro maker Altria, which signed a standstill agreement that prevents it from enlarging its Juul investment for six years, nevertheless is poised to see the value of its $12.8 billion investment surge if the latest funding round is successful, insiders noted.

Juul has run into roadblocks as it looks to expand outside the US, with regulators overseas concerned about the unusually high concentration of nicotine that its devices deliver.

Last August, Israel banned certain Juul pods just four months after the company launched there, saying its nicotine juice was three times as potent as what state regulations allowed.

In India, health ministers in January called for a ban on Juul after the company announced plans for a launch, forcing sales into the gray market, according to reports.

Nevertheless, Juul sales are blazing. For the 52 weeks ending April 21, vaping sales in the US were up 158%, to $3.8 billion, according to IRI Data. Juul has an estimated 70% share of the market.

Juul declined to comment.