By Chibuike Oguho
NEW YORK: Start up car insurance Root Inc sold shares in its initial public offering (IPO) on Tuesday for $27 each, above its target range, to raise $663.7 million, according to two people familiar with the matter.
The IPO values Root, which has $200 million in debt, at $6.7 billion. The company had set an initial target price of $22 to $25 per share for a sale of nearly 24.6 million shares.
Root’s IPO is greater than any other technology-powered insurers that became public this year. In May, insurance comparison website SelectQuote Inc raised $360 million in a listing that valued the company at $3.25 billion, while SoftBank Group-backed insurance company Lemonade Inc was valued at $1.6 billion in an IPO announced in July. raised $319 million.
Root, founded in 2015, began offering: car insurance and now uses a smartphone-managed driving test and an algorithm to offer estimates, according to the website. Tiger Global Management, a $36 billion hedge fund and venture fund manager, is an investor in Root.
In 2019, Root made $290.2 million in revenue with a net loss of $282.4 million. In the first six months of 2020, the company’s revenue was $245.4 million with a net loss of $144.5 million.
Shares in Root are expected to begin trading on the Nasdaq on Wednesday under the symbol “ROOT.”
Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo Securities are the leading underwriters for the offering.