Auto Insurer Root Raises $724M In Upsized IPO

Auto Insurer Root Raises $724M In Upsized IPO

Root Inc. on Tuesday raised $724 million in its initial public offering, pricing the IPO above its previously indicated range.

What Happened: The Auto insurance company said in a statement it is offering about 24.25 million Class A common stock shares at $27 each, while existing shareholders are offloading another 2.58 million shares.

Root has also roped in Dragonner Investment Group and private equity firm Silver Lake to invest a total of $500 million by way of private placements.

The company's shares are set to list on the Nasdaq Stock Market under the symbol "Root" on Wednesday.

Goldman Sachs Group Inc GS, Morgan Stanley MS, Barclays PLC BCS, and Wells Fargo & Co WFC are the primary book-runners for the issue. The underwriters for the IPO are entitled to a 30-day over-allotment option to purchase around 4 million shares.

Why Does It Matter: Root has priced its IPO significantly above the $22 to $25 price range it earlier marketed in a filing with the U.S. Securities and Exchange Commission.

Technology-backed online insurance companies have fared well in the pandemic affected economy. Root reported $245.4 million in revenue and $144.5 million net loss for the first half of the year, as noted by Reuters.

Compared to the 12-month period from January to December last year, Root has already achieved 84% of 2019 revenues with a 49% drop in net loss.

Other recent IPOs by online insurance companies include SelectQuote Inc SLQT and Lemonade Inc LMND.

Photo courtesy: Root Inc.

Posted In: Auto InsuranceinsuranceRoot Inc.NewsIPOsTech