Market Overview

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 (NYSE: GS), Morgan Stanley (NYSE: MS), Barclays PLC (NYSE: BCS), and Wells Fargo & Co (NYSE: 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 (NYSE: SLQT) and Lemonade Inc (NYSE: LMND).

Photo courtesy: Root Inc.


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