Automobile insurance startup Root Inc sold shares in its initial public offering (IPO) on Tuesday at $27 apiece, 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 range of $22-$25 per share for a sale of almost 24.6 million shares.
Root's IPO is bigger than those of other technology-powered insurance providers that have gone public this year. In May, insurance comparison website SelectQuote Inc raised $360 million in a listing that valued the firm at $3.25 billion, while SoftBank Group-backed insurance provider Lemonade Inc was valued at $1.6 billion in an IPO that raised $319 million in July.
Founded in 2015, Root began by offering car insurance and now uses a smartphone-administered driving test and an algorithm to offer estimates, according to its website. Tiger Global Management, a $36 billion hedge fund and venture fund manager, is an investor in Root.
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.
Shares in Root are due to begin trading on the Nasdaq on Wednesday under the symbol "ROOT."
Goldman Sachs, Morgan Stanley, Barclays and Wells Fargo Securities are the lead underwriters for the offering.
(Reporting by Chibuike Oguh in New York; Editing by Tom Hogue and Lincoln Feast.)