Industrial Tech Acquisitions II

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Contributor, Benzinga
January 10, 2022
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“The bourgeoisie cannot exist without constantly revolutionizing the instruments of production.” So stated German philosophers Karl Marx and Friedrich Engels in their controversial though historically significant book, The Communist Manifesto. Originally titled Manifesto of the Communist Party, the groundbreaking work eventually came to represent an irony within an irony, though surely an unintended consequence by the authors.

Underscoring the central ethos of Marxist philosophies is the concept that capitalism is at odds with the core interests of the working class. According to Marx, workers are alienated from the means of production because their utilization of this machinery stems from implicit coercion: the worker must convert time for wages as a matter of survival. Therefore, the philosopher reasoned that the working class would eventually revolt against the ruling aristocracy.

However, rather than a revolutionizing of production mechanisms, modern companies — particularly industrial firms — have been unintuitively slow in adopting burgeoning innovations. Among the challenges that Harvard Business Review identified, an unwillingness to embrace a culture of advanced learning has unnecessarily stymied corporate progress.

Further, the lag in technology adoption has been a decades-long issue. Cynically, the very act of de-revolutionizing the instruments of production offers job security. But the COVID-19 impact finally forced a tech rethink, auguring well for the initial public offering (IPO) of Industrial Tech Acquisitions II, Inc.

When Is the Industrial Tech Acquisitions II IPO Date?

Focusing on a merger with tech-focused areas such as software, mobile and remote communications (such as 5G), applications involving the Internet of Things (IoT), digital and energy transformation solutions and cloud computing, Industrial Tech Acquisitions II initially filed its intent to go public confidentially with the U.S. Securities and Exchange Commission (SEC) on Jan. 25, 2021.

However, following additional groundwork and multiple amendments to its market prospectus, Industrial Tech will finally ink its name on the IPO calendar on Jan. 12, almost a year from when the firm first disclosed its public ambitions. Shares will trade on the Nasdaq exchange under the ticker symbol ITAQU.

Under the terms of the IPO, Industrial Tech will distribute 15 million shares at a per-unit price of $10, resulting in a $150 million gross raise before deducting for expenses related to the deal. Each unit of ITAQU consists of one share of common stock and one-half of one warrant, which is exercisable at $11.50. The sole bookrunner for the proceedings is Wells Fargo & Co. (NYSE: WFC).

One of the more relevant new listings because of the lag in companies adopting efficient and innovative workflow solutions, ITAQU stock jumps into the fray in an awkward moment. As you’ve read, the IPO market experienced a record-breaking rally last year, with fresh U.S.-based listings generating a valuation above $301 billion. Stacked with global IPOs, the total tally runs up to over $594 billion.

However, the financial market — as is the case with the known universe — operates under the law of gravity. While positivity tends to breed more positivity, history is replete with examples of outcomes that rudely interrupt collective fantasies. Writing an op-ed for The New York Times, Yale professor of economics Robert J. Shiller provided a stark reminder of what could go wrong when investors deliberately abandon their well-reasoned scruples.

Adding to the pressure of ITAQU stock is that the underlying investment is tied to a special purpose acquisition company (SPAC). Unlike your typical public market raise, a SPAC — also known as a shell company or blank-check firm — has no underlying operations. Instead, its purpose is to launch an IPO to raise funds in support of a merger with a private enterprise.

Once the business combination is complete, the SPAC assumes the identity of the target enterprise. In turn, the latter enjoys a roundabout way to enter the public arena, hence the common term reverse merger. Though SPACs enable private companies to IPO relatively quickly, you must perform extensive due diligence before proceeding.

Industrial Tech Acquisitions II Financial History

Because of its structure as a shell company, Industrial Tech Acquisitions II has no financial history other than its $150 million gross raise. Should the IPO go along the outlined terms, the SPAC will command a market value of $188 million.

Following their raise, the collected funds for SPAC-based IPOs enter a trust account. Should a blank-check firm successfully identify and complete a business combination, the account becomes part of the newly public enterprise. As well, stakeholders of the SPAC become equity owners of the new ticker in proportion to their stake and as defined under the deal’s specifications.

Typically, SPACs have about two years to merge with a private enterprise (for Industrial Tech, the time limit is between 15 to 18 months from the closing of the IPO, depending on whether the SPAC exercises its time extension option). Should no merger candidate materialize following the time expiry, shareholders have their equity stake redeemed at the initial offering price (usually $10 per share).

Also noteworthy is that if SPAC investors don’t agree with the proposed business combination, they can choose to redeem their shares rather than go through with the merger. As data from Dealogic noted, SPAC redemption rates in 2021 have been exceptionally elevated compared to rates in 2020, implying that many stakeholders would rather absorb the opportunity cost of holding a shell company for roughly two years rather than move ahead with a possibly bad deal.

Although blank-check firms impose multiple financial nuances you must be aware of before signing your name on the dotted line, you should also judge each opportunity by its own merits. Here, Industrial Tech seemingly appears a cut above other SPACs in its relevant focus zone.

Primarily, the COVID-19 pandemic provided a wake-up call for industrial firms across all specialties that their longstanding apathy toward tech integrations and workflow improvements was no longer palatable nor sustainable. Thus, it’s not a surprise that a June 2021 report from Grand View Research indicated that by 2028, the industrial IoT market could veritably explode to $1.11 trillion — a staggering compound annual growth rate (CAGR) of 22.8% from 2021.

For further perspective, the GDP of Mexico (ranked 15 in the world) stands at $1.15 trillion. Thus, if Industrial Tech successfully completes a viable business combination, ITAQU stock could fly higher.

Industrial Tech Acquisitions II Potential

Although the impact on balance regarding the COVID-19 pandemic is largely negative, for some business communities, the global health crisis was the kick in the pants they needed to jumpstart digital tech integrations. Further, a report from McKinsey & Company reveals that “responses to COVID-19 have speeded the adoption of digital technologies by several years — and that many of these changes could be here for the long haul.”

Theoretically, then, it shouldn’t be too hard for Industrial Tech to identify a promising merger target. Moreover, few attributes provide more confidence in the SPAC arena than sponsors that have a successful track record. The CEO of Industrial Tech, Scott Crist, led the first iteration of the SPAC, resulting in a business combination with Arbe Robotics (NASDAQ: ARBE), an ultra-high-resolution radar-imaging firm.

Despite this massive potential, ITAQU stock — like any shell company — features heavy risks. Indeed, you only need to look at Arbe Robotics’ performance, which shed nearly 20% between the Dec. 9, 2021 and Jan. 7, 2022 sessions to realize that glitzy marketing brochures are no match for strict money management.

How to Buy Industrial Tech Acquisitions II IPO (ITAQU) Stock

If you intend to acquire ITAQU on the open market, you’ll need to know how to buy stocks. Below is a quick refresher.

Step 1: Pick a brokerage.

Since the best brokers nowadays compete on similar incentives, take the time to consider which platform ideally fits your needs.

Step 2: Decide how many shares you want.

Because SPAC-based IPOs are essentially blind orders, they are usually risky. Therefore, choose 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:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

ITAQU 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.

ITAQU Pre-IPO

The SEC directs investors seeking pre-IPO information about ITAQU stock to electronic trading platform Webull.

Strong Potential With a Lingering Question

Undoubtedly, the target focus of Industrial Tech Acquisitions II — bolstering industrial firms with cost-saving, revenue-accretive innovations — is extraordinarily relevant. However, as the first iteration of the SPAC confirmed, a great marketing narrative doesn’t always coincide with reliable profitability.

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