Shares of auto insurance startup listed at $27 a piece following its initial public offering (IPO), above its target range, said two sources familiar with the matter at hand, The startup had aimed at raising $663.7 million.
Following the IPO, Root, which has $200 million in debt, was valued at $6.7 billion. It had initially set a target price range of $22-$25 per share for a sale of around24.6 million shares.
Incidentally, Root’s IPO was bigger than those of other technology-powered insurance providers that have gone public this year. Case in point: in May, SelectQuote Inc, an insurance comparison website, raised $360 million in a listing that valued the firm at $3.25 billion; SoftBank-backed insurance provider Lemonade Inc’s IPO in July saw it raise $319 million with the company valued at $1.6 billion.
According to its website, Root, which was founded in 2015 by offering car insurance, now uses a smartphone-administered driving test and an algorithm to offer estimates. The startup is backed by Tiger Global Management, a $36 billion hedge fund.
In 2019, Root earned $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.
The company’s shares will begin trading on the Nasdaq from Wednesday under the symbol “ROOT.”
Wells Fargo Securities, Goldman Sachs, Barclays and Morgan Stanley, were the lead underwriters for the IPO.