Brookline Capital Acquisition Corp (NASDAQ: BCACU) is going public on Friday. However, with 2020 being an IPO frenzy, understanding which companies to investigate further is tough. Especially, as valuations leading up to IPOs can be deceptive. Today’s article will explain who Brookline Capital is to our readers and what you need to know before investing.
Table of contents 1. IPO overview 2. Bullish and Bearish takes on Brookline Capital
Who is Brookline Capital, and why the IPO?
Brookline Capital is a blank check company, known as a Special Purpose Acquisition Company (SPAC). If the words SPAC or PIPE investors sound foreign, then reading our simple explanation is crucial. Investment bank Brookline Capital Markets brought BCACU to life, which means smart money is already backing this IPO. Brookline intends to raise $50 million by offering 5 million units at $10. Each unit comprises of one share of BCACU and one-half of a warrant, which is exercisable at $11.50.
The target company is a high-growth life science business that is developing a new product for the market. BCACU should be able to acquire a life science company before the two-year deadline successfully. Especially, as CEO and Chairman, Samuel Wertheimer is a scientific advisor at Brookline Capital Markets. In which Wertheimer can leverage his scientific networks to land an acquisition.
YIG would like to point that blank check companies usually have two years to execute the acquisition before returning the money to the investors. Thus, Brookline’s decision to go public should provide some reassurance to investors. Because SPAC’s often hold back if they are not confident in their ability to acquire a company within the two years.
Here’s what you need to know before investing in Brookline Capital
Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research.
Bullish investors would argue that the IPO fever and SPAC hype will send Brookline Capital soaring in no time. Not to mention that BCACU’s target industry, life sciences, could see FOMO kick in as healthcare explodes. The bulls would further drive home their point by stating that the IPO price will be the point of maximum financial gain. Because retail investors are still yet to arrive in numbers. Overall, the bullish side is speculation. However, if their hypothesis was right then yes, investing in Brookline Capital at IPO could be a smart play (opinion not advice)
While the bullish side does sound attractive, there are still cheerleaders with the bears. The strongest argument for the bears is that investors are putting their eggs in already rising SPAC’s. For example, SHLL is up 400% since its SPAC IPO. Also, BCACU’s potential acquisition is still a fair way away. Hence, the bearish cheerleaders have a loud voice.
Overall, the bears win the fight on BCACU. Because of the lack of acquisition talks. However, once Brookline lines up a life sciences company, the bulls should reign supreme. (opinion not advice)
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.