(Reuters) – Root Insurance Co has hired Goldman Sachs Group Inc GS.N to lead preparations for an initial public offering that could value the provider of auto insurance through mobile apps at around $6 billion, according to people familiar with the matter.
The listing would make Root the latest technology-powered insurance provider to go public. In May, insurance comparison website SelectQuote Inc SLQT.N raised $360 million in its IPO, followed in July by SoftBank Group-backed insurance provider Lemonade Inc LMND.N, which raised $319 million. The respective offerings valued the companies at $3.25 billion and $1.6 billion.
Root’s IPO would be significantly bigger. The company is aiming for a valuation of between $5 billion and $6 billion, the sources said. Root’s stock market debut could come later this year or early in 2021, the sources said, requesting anonymity as the plans are confidential.
Lockdown measures during the coronavirus pandemic have accelerated the shift by U.S. consumers to research and buy financial products from digital platforms, drawing increased backing from investors.
Columbus, Ohio-based Root did not respond to a request for comment. Goldman Sachs declined to comment.
Founded by Alex Timm and Dan Manges in 2015, Root began by offering car insurance and now uses a smartphone-administered driving test and an algorithm to offer a quote, according to its website, that is fairer than the data used by traditional insurers. In 2019, the company expanded into renters insurance.
Root’s previous funding round, announced in August 2019 and led by DST Global and Coatue Management, valued it at $3.65 billion.
Reporting by David French in New York and Joshua Franklin in Boston; Editing by Dan Grebler