Bearish stock to watch: BRP Group Inc (NASDAQ: BRP)

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BRP Group Inc (NASDAQ: BRP) stock fell 4.48% on June 23rd, 2020 and continued its bearish momentum falling over 3.2% on 24th June, 2020 (as of 12:22 pm GMT-4 ; Source: Google finance). The company announced that it will raise funds through an underwritten offering of 11,500,000 shares of its Class A common stock, which will depend upon the market conditions and other factors.  BRP intends to grant the underwriters a 30-day option for purchasing up to 1,725,000 additional shares of its Class A common stock at the public offering price, which is less the underwriting discounts and commissions. Further, the company disclosed an update on “MGA of the Future” policies in force, which posted the growth to 440,155 at June 22, 2020 from 401,520 at March 31, 2020.

Meanwhile, from the sale of 10,750,000 of the shares of Class A common stock offered in the offering BRP will use the net proceeds to purchase newly issued membership interests of Baldwin Risk Partners, LLC from Baldwin Risk Partners, LLC. Baldwin Risk Partners, LLC will use the funds received from the sale of LLC Units to BRP to pay fees and expenses related with the offering and for the potential strategic acquisitions of, or investments in, other businesses or technologies that BRP believes will complement its current business and expansion strategies and other general corporate purposes, such as for working capital and at times paying down some amounts outstanding under its revolving line of credit.

Moreover, BRP will use the funds raised from the sale of the remaining 750,000 shares of Class A common stock offered in the offering to purchase 565,102 LLC Units from Lowry Baldwin, who is the Chairman of BRP, 92,449 LLC Units from Elizabeth Krystyn and 92,449 LLC Units from Laura Sherman, each of whom is one of the Company’s founders.

On the other hand, the company has recently announced that Baldwin Krystyn Sherman Partners, LLC, which is the middle-market subsidiary of BRP Group, has acquired significant all assets of Rosenthal Bros., Inc., which is a Chicago-based provider of P&C insurance, employee benefits and private client solutions to middle market companies and individuals.  Rosenthal Brothers has reported annual revenues of approximately $18.8 million. After this deal, Rosenthal Brothers will be rebranded under the Company’s BKS-Partners banner. Rosenthal Brothers offers insurance solutions for the real estate industry and has a stellar reputation in large habitational real estate. This deal will boost BRP’s P&C and full-service insurance solution capabilities, particularly within the real estate sector, and gives the company a major platform to build on in the important Chicago market.

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