The deal values the Hippo insurtech company at a whopping $5 billion. The transaction has been approved by the Board of Directors from both Hippo and Reinvent.
This merger will allow the new Hippo SPAC company to go public on the New York Stock Exchange when the transaction gets the customary closing and approval by all the shareholders around mid-2021. It is aimed to tap into the equity markets while straight-up challenging the traditional insurers. Also, Hippo is looking to reinvent the insurance industry that has lagged in taking up the technology.
Hippo Enterprises Inc., from Palo Alto, California, is a home insurance company employing more than 400 staff. It has taken a proactive approach to help homeowners avoid insurance claims and prevent losses. With the online underwriting technology, Hippo uses aerial imagery to assess roof conditions and use building permits to detail home features. It provides homeowners an insurance quote within a minute and the facility to buy an insurance policy within five minutes. Hippo is trying to become a pioneer in establishing end-to-end vertically integrated insurance and home protection platforms by utilizing real-time data, smart home technology, and a suite of home services.
Reinvent Technology Partners Z is a SPAC that takes a venture capital at scale approach to business. Co-directors of Reinvent are Reid Hoffman, the co-founder of LinkedIn, and Marc Pincus, founder of Zynga Inc.
Once the transaction closes during mid-2021, the new Hippo SPAC company will have $1.2 billion at closing to fund growth and operations. It will include $230 million of cash held in Reinvent's trust account courtesy of its IPO from November 2020. The transaction also gets the support of $550 million private investment in public equity (PIPE), increased from $500 million at $10 per share from investors like Ribbit Capital, Lennar, Dragoneer Investment Group and mutual fund companies. Currently, Hippo has raised around $709 million in funding. Upon completing the merger, Hippo shareholders will be retaining approximately 87% ownership of the new company.