Metromile Inc., the pay-per-mile auto insurer, has reached a deal to go public by merging with Insu Acquisition Corp. II (Insu II), a special purpose acquisition company (SPAC).
The merger will result in Metromile becoming a publicly listed company without the risk of an IPO. Upon closing of the transaction, the combined company will be named Metromile, Inc. and is expected to remain listed on NASDAQ under the new ticker symbol “MLE.”
Sponsored by financial services firm Cohen & Co., Insu II targets business deals with companies in the insurance industry. Insu II raised $230 million in an initial public offering in September 2020.
It is anticipated that the transaction will provide Metromile with up to approximately $294 million of cash to pursue growth opportunities. The combined company expects to use proceeds from the transaction to reduce existing debt and accelerate growth initiatives, including expansion into new markets, increasing partnerships and launching new products and features.
The deal is expected to close in the first quarter of 2021.
Insu will combine with Metromile for aggregate consideration of approximately $842 million in Insu II Class A common stock and up to $30 million of cash consideration, plus an additional 10 million shares of Class A common stock that will be earned if the combined company achieves certain price targets over time.
The transaction reflects an estimated $1.3 billion combined company pro forma implied market capitalization.
Founded in 2011 and headquartered in San Francisco, Metromile provides insurance policies that are priced and billed by the mile, which save customers, on average, 47% over what they were paying their previous auto insurer.
Currently operating in eight states, Metromile aims to have a 21-state footprint by end of 2021 and 49 states by end of 2022.
“We are excited to bring our vision of transforming the auto insurance industry to the public markets by partnering with Daniel Cohen and the team at Insu II, whose deep experience in the insurtech space will help propel Metromile to the next level,” said Dan Preston, chief executive officer of Metromile.
“Today’s announcement launches Metromile’s new chapter in delivering the fairest, most individualized auto insurance. As a public company, we expect to use our strengthened balance sheet to accelerate our growth, bring Metromile nationwide, and scale rapidly toward sustained profitability. The era of fixed price auto insurance is coming to an end,” Preston added.
“The massive U.S. auto insurance industry has been inefficient and ripe for disruption for decades, and Metromile’s technology platform provides a clear competitive advantage over the legacy carriers, positioning them at the forefront of the revolution they founded,” said Daniel Cohen, chairman of the board of directors of Insu II.
Photograph: Close-up of logo for Metromile pay per mile car insurance company Photo credit: Smith Collection/Gado/Getty Images.
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