Hippo Agrees to a Merger With Mark Pincus, Reid Hoffman SPAC
(Bloomberg) -- Hippo Enterprises Inc., a home-insurance startup, agreed to go public through a merger with Reinvent Technology Partners Z, a special purpose acquisition company that counts Zynga Inc. founder Mark Pincus and LinkedIn co-founder Reid Hoffman as lead directors.
The deal values the combined entity at $5 billion, the companies said Thursday in a regulatory filing. Reinvent Technology Partners Z will be renamed Hippo Holdings Inc.
The transaction will allow Hippo to trade publicly after years of expanding throughout the U.S. and snapping up a home-maintenance platform and an insurance carrier. Hippo, led by Chief Executive Officer Assaf Wand, raised capital last July in an investment that valued the company at $1.5 billion.
“This is a transition into the public market, just in the best way possible,” Wand said in an interview. “I don’t care about 400 SPACs. I care about one SPAC that is thinking about the growth of the company for the next 10 years.”
Hippo is one of the latest insurance-techs to use a SPAC to go public. Metromile Inc., which allows customers to pay for car insurance on a per-mile basis, agreed in November to a merger with Insu Acquisition Corp. II.
As part of the deal, a director appointed by Reinvent will join the board of the startup, according to Thursday’s statement. The two parties have also agreed to a long-term lock-up on founder shares for up to two years, a move that Wand said helps align everyone’s motives for long-term growth.
“If someone can help us navigate this murky water of going to be a public company and stay with us and help us build to the scale that we want over time, it’s the smart and prudent thing to do,” Wand said.
Hippo’s strategy as an insurtech has been to dig even deeper into the home-coverage market, a sector that totaled $104 billion in the U.S. in 2019, even as rival startups such as Lemonade Inc. have expanded from products such as renters’ policies to life insurance. Hippo struck a deal for an insurance carrier, Spinnaker Insurance Co., last year and bought a home-maintenance platform called Sheltr in 2019 to help customers do routine checkups.
“When you look at various insurtech, and you say, ‘OK, well which area is the most valuable business,’ I actually think home insurance is the right way to do that,” Hoffman said in an interview. “Investing and partnering with this kind of company, this kind of transformation, this kind of team -- that’s why I do investing.”
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