Buy RTPZ SPAC Stock Before Hippo Merger to Bet on Home Insurance Market
The Reinvent Technology Partners Z (RTPZ) SPAC is merging with Hippo Enterprises. What's the RTPZ SPAC's merger date and valuation?
![Ambrish Shah - Author](https://media.marketrealist.com/brand-img/kcckh0uvz/200x200/ambrish-ambrish-shah-1595895187836.jpg)
Mar. 5 2021, Published 8:40 a.m. ET
![House and Hippo logo](https://media.marketrealist.com/brand-img/bRPYVdKXv/480x251/hippo-rtpz-spac-merger-date-1614951419464.jpg 480w, https://media.marketrealist.com/brand-img/bRPYVdKXv/640x335/hippo-rtpz-spac-merger-date-1614951419464.jpg 640w, https://media.marketrealist.com/brand-img/bRPYVdKXv/768x402/hippo-rtpz-spac-merger-date-1614951419464.jpg 768w, https://media.marketrealist.com/brand-img/bRPYVdKXv/1024x536/hippo-rtpz-spac-merger-date-1614951419464.jpg 1024w, https://media.marketrealist.com/brand-img/bRPYVdKXv/1280x670/hippo-rtpz-spac-merger-date-1614951419464.jpg 1280w, https://media.marketrealist.com/brand-img/bRPYVdKXv/1440x753/hippo-rtpz-spac-merger-date-1614951419464.jpg 1440w, https://media.marketrealist.com/brand-img/bRPYVdKXv/1600x837/hippo-rtpz-spac-merger-date-1614951419464.jpg 1600w, https://media.marketrealist.com/brand-img/bRPYVdKXv/2160x1130/hippo-rtpz-spac-merger-date-1614951419464.jpg 2160w)
Insurance technology company Hippo Enterprises is gearing up to go public through a reverse merger with Reinvent Technology Partners Z (RTPZ). On Feb. 6, Bloomberg reported that Hippo was nearing a deal to merge with Reinvent. The RTPZ SPAC raised about $200 million in a November 2020 IPO. What's the RTPZ-Hippo merger date and should you buy the SPAC stock now?
RTPZ SPAC stock has gained 4.5 percent from its IPO price of $10 apiece. On March 4, the stock lost nearly 6 percent and closed at $10.45 following the merger news. However, RTPZ stock is trending up in the after-hours trading session.
![hippo rtpz spac merger date](https://media.marketrealist.com/brand-img/Y8pwx3gv_/480x252/hippo-rtpz-spac-merger-date-1614949654857.jpg 480w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/640x335/hippo-rtpz-spac-merger-date-1614949654857.jpg 640w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/768x402/hippo-rtpz-spac-merger-date-1614949654857.jpg 768w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/1024x536/hippo-rtpz-spac-merger-date-1614949654857.jpg 1024w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/1280x670/hippo-rtpz-spac-merger-date-1614949654857.jpg 1280w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/1440x754/hippo-rtpz-spac-merger-date-1614949654857.jpg 1440w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/1600x838/hippo-rtpz-spac-merger-date-1614949654857.jpg 1600w, https://media.marketrealist.com/brand-img/Y8pwx3gv_/2160x1131/hippo-rtpz-spac-merger-date-1614949654857.jpg 2160w)
RTPZ SPAC sponsors
The RTPZ SPAC held an IPO in November 2020 and offered 20 million shares at a price of $10. The SPAC is backed by LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus. The two investors have also launched another blank-check company Reinvent Technology Partners (RTP). On Feb. 24, RTP agreed to take Joby Aviation public.
Hippo-RTPZ merger date isn't final, but it's imminent.
The Hippo and RTPZ merger will likely close in mid-2021. The transaction is subject to approval from RTPZ’s stockholders and meeting other customary closing conditions. The deal's pro forma enterprise value is expected to be $5 billion.
Hippo-RTPZ merger details
The combined entity is expected to have around $1.2 billion in cash when the deal closes to fund the company’s growth initiatives. The amount includes about $230 million of cash held by RTPZ in trust and an additional $550 million in PIPE (private investment in public equity) at $10 apiece. Investors in the PIPE include Dragoneer, Lennar, Ribbit, top-tier mutual funds, and Reinvent Capital. Existing Hippo shareholders will likely own about 87 percent of the combined company when the deal closes.
Hippo’s valuation
RTPZ valued Hippo at a pro forma implied equity value of $6.2 billion. Meanwhile, at RTPZ’s current stock price, Hippo is valued at around $6.5 billion. In comparison, Lemonade, Metromile, and Root Insurance have market capitalizations of $5.8 billion, $1.4 billion, and $3.4 billion, respectively.
In its presentation announcing the merger, Hippo provided a valuation comparison. Its 2023 AV-to-gross written premium multiple is 4.4x. In comparison, Lemonade’s, Metromile’s, and Root's multiples are 7.8x, 2.5x, and 1.0x, respectively.
RTPZ stock looks like a good buy
Founded in 2015, Hippo is a property insurance company based in California. The company, backed by CEO Assaf Wand, had raised capital in 2020 in an investment that valued Hippo at $1.5 billion.
![hippo rtpz spac merger date](https://media.marketrealist.com/brand-img/bLCRlqFB7/480x252/hippo-rtpz-spac-merger-date-1614949527512.png 480w, https://media.marketrealist.com/brand-img/bLCRlqFB7/640x335/hippo-rtpz-spac-merger-date-1614949527512.png 640w, https://media.marketrealist.com/brand-img/bLCRlqFB7/768x402/hippo-rtpz-spac-merger-date-1614949527512.png 768w, https://media.marketrealist.com/brand-img/bLCRlqFB7/1024x536/hippo-rtpz-spac-merger-date-1614949527512.png 1024w, https://media.marketrealist.com/brand-img/bLCRlqFB7/1280x670/hippo-rtpz-spac-merger-date-1614949527512.png 1280w, https://media.marketrealist.com/brand-img/bLCRlqFB7/1440x754/hippo-rtpz-spac-merger-date-1614949527512.png 1440w, https://media.marketrealist.com/brand-img/bLCRlqFB7/1600x838/hippo-rtpz-spac-merger-date-1614949527512.png 1600w, https://media.marketrealist.com/brand-img/bLCRlqFB7/2160x1131/hippo-rtpz-spac-merger-date-1614949527512.png 2160w)
RTPZ Stock Price
In 2020, Hippo reported total written premiums of $405 million in 2020, which represents a growth of 33 percent YoY. The company expects to post total written premiums of $544 million in 2021, $796 million in 2022, $1.15 billion in 2023, and $1.6 billion in 2024. In the presentation, Hippo highlighted that the 2023 gross written premiums for Lemonade, Metromile, and Root are expected to be $778 million, $524 million, and $2.15 billion.
Hippo thinks that the total addressable market for the U.S. homeowners insurance market is worth about $105 billion. Based on the company's strong growth outlook, RTPZ stock looks like a good buy. However, the stock is a speculative play until the Hippo-RTPZ deal closes.