Hippo Enterprises set to go public via SPAC merger

Hippo Enterprises Inc. is poised to go public after agreeing to merge with special purpose acquisition company Reinvent Technology Partners Z.

The combined company is expected to have about $1.2 billion in cash at closing, including up to roughly $230 million of cash held in Reinvent's trust account from its IPO on Nov. 23, 2020.

The transaction is further supported by a $550 million private investment in public equity, or PIPE, at $10 per share that was led by current investors, top tier mutual funds and Reinvent Capital. After the closing of the merger, Hippo's existing stockholders are expected to own approximately 87% of the pro forma combined company.

Reinvent and Hippo have agreed to a long-term lock-up on founder shares for up to two years, and an earnout structure with full vesting not realized until the share price reaches $20 per share. Major stockholders and key executives of Hippo have also agreed to enter into separate lockup agreements.

A Reinvent appointed director will join Hippo's board at the transaction closing.

The transaction has been unanimously approved by the boards of both Hippo and Reinvent. It is expected to close in mid-2021, subject to the satisfaction of customary closing conditions, including the approval of shareholders of Reinvent and the stockholders of Hippo.

Home insurance products offered through Hippo Insurance Services are currently available in 32 states, covering more than 70% of the U.S. population, and the company expects its products to be available to 95% of the population by the end of 2021, according to a statement.

Hippo has grown historical total written premiums by 69% over the last three years, and it launched in 12 new states in 2020.

Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are acting as co-financial advisers to Hippo, while Latham & Watkins LLP is acting as its legal counsel. Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC also acted as joint placement agents on the PIPE transaction.

Barclays is acting as financial adviser to Reinvent and Sullivan & Cromwell LLP is serving as its legal counsel.