Car insurance start-up Root raises $664M in IPO: report

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.

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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.

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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.

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Shares in Root are due to begin trading on the Nasdaq on Wednesday under the symbol "ROOT."

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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.)