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It was only less than a month ago that global cryptocurrency investors, though disappointed with the final sessions of 2021, were nevertheless ecstatic with the tremendous gains overall that Bitcoin accrued. Sure, the rapid-fire blitzkrieg in terms of upside valuation was phenomenal. But just as importantly (if not more so), cryptos generated a broader integration that prior rallies in the sector lacked.
For the first time, Bitcoin and the virtual currency complex enjoyed holistic acceptance among the biggest institutional players. Ranging from big banks to private businesses to even university curriculums, seemingly everyone was fearful of missing the crypto train. Searches for daily pricing charts accelerated, as did research for the best crypto app. But underlying this decentralized revolution is an emerging reality: Asia is rising, and quickly.
Crypto investors will recall that this present wave of volatility wasn’t the first time Bitcoin slipped to dangerous levels. In May, BTC shrank below $34,000 as China cracked the whip on its blockchain-based infrastructure. More recently, evidence shows that Chinese investors have been cashing out of cryptos as tightening COVID-19 restrictions and weak economic metrics hit their country.
Again, the Bitcoin fallout is merely an illustration. The eastern hemisphere is taking over the driver’s seat, meaning that forward-thinking investors may want to consider the debut of Generation Asia I Acquisition Ltd.
- What is Generation I Acquisition?
- When is the Generation I Acquisition IPO Date?
- Generation I Acquisition Financial History
- Generation I Acquisition Potential
- How to Buy Generation I Acquisition IPO (GAQ.U) Stock
- GAQ.U Restrictions for Retail Investors
- GAQ.U Pre-IPO
- Searching for Greener Grass
What is Generation I Acquisition?
Structured as a special purpose acquisition company (SPAC), Generation I Acquisition features no underlying business. Instead, its purpose is to launch its own initial public offering (IPO) to raise funds in support of an eventual merger with a private enterprise. Following the (hopefully) successful business combination, Generation I will assume the identity of the target enterprise.
However, interested investors are not completely in the dark. According to the SPAC’s IPO prospectus, it’s focusing on “a target that is at least partially owned by a financial sponsor(s) with operations or prospective operations in the technology, media & telecommunications (“TMT”), business services or consumer sectors,” particularly in North Asia and Southeast Asia.
When is the Generation I Acquisition IPO Date?
Leading off a busy final complete week of the first month of the new year, Generation I printed its name on the IPO calendar on Jan. 24, 2022. Shares trade on the New York Stock Exchange under the ticker symbol GAQ.U.
Based on the terms of the IPO or the first time a private company distributes its equity ownership to public (retail) investors, Generation I offered 20 million units at $10 each for a gross raise of $200 million prior to deducting expenses related to the deal. Each unit consists of one share of common stock and one-half of a warrant, which is exercisable at $11.50.
Further, anchor investors or institutional players allotted shares of a company prior to its IPO intend to purchase $203 million of units in the offering. As well, the SPAC may raise an additional $80 million following a possible business combination. At the stated condition, Generation I will command a market value of $270 million. Nomura Holdings Inc. (NYSE: NMR) represents the IPO’s only bookrunner.
Naturally, the heavy involvement of anchor investors is a distinct factor for GAQ.U stock. Although a measure to gin up interest in the IPO — particularly if the anchor investors have a powerful reputation — Generation I unfortunately is entering the market at perhaps one of the most unideal moments in recent memory.
As GAQ.U stock made its debut, benchmark indices such as the Dow Jones Industrial Average and the S&P 500 index quickly slipped from their early morning perch. Thus, the usual hearty cackle of the rooster — a common theme throughout 2021 — started and ended with a disheartening whimper.
Undergirding the general volatility is the Federal Reserve, which previously expressed concerns about soaring consumer prices. Therefore, the central bank has signaled multiple rate hikes to combat inflation. However, such a policy shift will likely entail rising borrowing costs, which disincentivizes businesses from seeking financing for expansionary efforts. In turn, investors rotate out of growth narratives and into already established dividend-bearing assets.
However, the latest concern about Russia’s threatened invasion of Ukraine, drawing the U.S. and NATO allies into possible armed conflict, has everyone on edge. Though no one is angling for war, the reality is that every administration from former President George W. Bush onward has failed to contain Russia’s ambitions for global power.
One wrong diplomatic move and war could reach the American homeland, hence the defensive posture in the global markets.
Generation I Acquisition Financial History
Because of its structure as a SPAC, Generation I Acquisition has no financial history other than the funds it will raise through its IPO. Following the closure of the proceeding, the money will basically enter into escrow, only to be distributed either to the targeted enterprise or back to shareholders if no target can be identified.
Under the terms of the IPO prospectus, Generation I has between 18 months to 24 months following the closing of its offering to identify a viable target and complete a business combination. Failure to do so will result in a return of capital to stakeholders barring an exception to the stated timeframe.
However, investors should also recognize that individual shareholders, upon learning of a proposed merger, can reject the offering. In such cases, they have the option of redeeming their stake at the redemption rate (typically the initial offering price of $10). As The New York Times warned in December 2021, SPACs up to that point featured redemption rates of around 50%, meaning investors would rather absorb opportunity costs than move through with proposed deals.
That’s a sobering thought, considering that 2020’s SPAC redemption rate was only 20%. Combined with the incredibly dilutive potential of these shell companies, investors must think carefully about engaging this or any other SPAC-based IPO.
At the same time, you must assess GAQ.U stock on its own merits. Should Generation I move through with its TMT focus — to be clear, intentions are not guarantees — it enjoys a lucrative market backdrop. According to PwC, between the first quarter of 2019 through Q2 2021, deal volume in the Asia-Pacific TMT sector exceeded that of Europe, the Middle East and Africa (EMEA).
Further, while SPACs have generated intense scrutiny as cynical vehicles to extract wealth from retail investor pockets — and surely, their underperformance relative to benchmark indices hasn’t eased this reputation — PwC also notes that for the TMT industry, the SPAC boom has helped fuel capital inflows to promising international companies. Such a circumstance could be a huge lift for GAQ.U stock.
Finally, Reuters noted last November that Southeast Asia’s internet economy could reach $1 trillion by 2023. A robust ecosystem like this could easily entice investor dollars if Generation I steers in that direction.
Generation I Acquisition Potential
According to GlobalData research, the Asia-Pacific region’s mobile communications market alone could command a valuation of $404 billion by 2025, representing a compound annual growth rate (CAGR) of 6.11% from 2020. Thanks to the acceleration of connectivity initiatives in Southeast Asia, certain areas are ripe for massive upside potential.
However, shifting social mores also require companies to act ethically. Thus, the geographically diverse territories of Asia present infrastructural concerns. Technically, enterprises can focus solely on bolstering major metropolitan areas. Unfortunately, such moves may foster growing global wealth inequities, thus opening Generation I to sharp criticism if it fails to effectively navigate heightened sensitivities.
How to Buy Generation I Acquisition IPO (GAQ.U) Stock
You’ll need to acquire GAQ.U at the open if interested, necessitating knowing how to buy stocks. The below steps provide a quick guide to the essentials.
Step 1: Pick a brokerage.
With the best brokers competing on similar incentives, focus your time on platforms that ideally fit your needs.
Step 2: Decide how many shares you want.
All IPOs present risks, particularly SPAC-based business combinations. Therefore, approach GAQ.U with a balanced share count.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
GAQ.U Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
Unfortunately, no pre-IPO access is available for GAQ.U stock.
Searching for Greener Grass
On the surface, the Asia-Pacific TMT industry presents ample upside potential for GAQ.U stock, especially in developing regions in Southeast Asia. However, emerging opportunities come with emerging risks that average American investors may be unaccustomed to. Therefore, always conduct your due diligence.
Disclosure: The author holds a long position in Bitcoin.