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SPAC Deep Dive

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<ul><li>When Chamath Palihapitiya announced that he was backing auto-insurance startup Metromile, he compared it with Buffet’s purchase of Geico.</li><li>Metromile merged with INSU Acquisition Corp II in February 2021 in a deal that valued the insure tech firm at $1.3 billion</li><li>This transaction has likely set a precedent for De-SPACs that may have gone public at lofty valuations, yet still have strong fundamentals at its core</li></ul>

When Chamath Palihapitiya announced that he was backing auto-insurance startup Metromile, he compared it with Buffet’s purchase of Geico.Metromile merged with INSU Acquisition Corp II in February 2021 in a deal that valued the insure tech firm at $1.3 billionThis transaction has likely set a precedent for De-SPACs that may have gone public at lofty valuations, yet still have strong fundamentals at its core

Three De-SPACs that Could Be Acquired Soon

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/policybazaar-insurance-web-aggregator" target="_blank" data-smartkarma-citation="entities:33470:1" rel="noopener">Policybazaar Insurance Web Aggregator (1569999D IN)</a>/PB Fintech operates the Policybazaar and Paisabazaar platforms in India. Policybazaar is India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold in FY20, according to Frost &amp; Sullivan. Paisabazaar is India’s largest digital consumer credit marketplace with a 53.7% market share, based on disbursals in FY21, according to Frost &amp; Sullivan. PB Fintech’s shareholders include SoftBank Vision Fund, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, Tiger Global and <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>.   PB Fintech will launch its IPO on 01 November at an indicative price range of Rs940-980. The IPO comprises a primary raise of Rs37,500 million ($502 million) and a secondary raise up to Rs19,600 million ($262 million). The main secondary seller is SoftBank Vision Fund which aims to sell up to Rs18,750 million ($250 million) worth of shares. In <a href="https://www.smartkarma.com/insights/pb-fintech-policybazaar-ipo-initiation-insurance-policy" target="_blank" data-smartkarma-citation="insights:55735" rel="noopener">PB Fintech (Policybazaar) IPO Initiation: Insurance Policy</a>, we stated that Policybazaar, which is India’s largest digital consumer credit marketplace, is a direct play on the rising insurance penetration rates in India. PB Fintech operates an asset-light capital model and does not underwrite any insurance or retain any credit risk on loans. The business is well-positioned to benefit from the post-COVID-19 recovery in insurance policies sales and loan disbursals by its partners. Helped by strong brand recognition and retention rates, the favourable unit economics also suggest that medium-term profitability is within reach. <div class="content-highlight">In this note, we look at the updated prospectus which outlines the 1QFY22 results (for the quarter ending June) and recent developments. Overall, the recent results reinforce our view that PB Fintech has attractive fundamentals. We will discuss valuation in our next note.  </div>

Policybazaar Insurance Web Aggregator (1569999D IN)/PB Fintech operates the Policybazaar and Paisabazaar platforms in India. Policybazaar is India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold in FY20, according to Frost &amp; Sullivan. Paisabazaar is India’s largest digital consumer credit marketplace with a 53.7% market share, based on disbursals in FY21, according to Frost &amp; Sullivan. PB Fintech’s shareholders include SoftBank Vision Fund, Tencent (700 HK), Tiger Global and Info Edge India (INFOE IN).   PB Fintech will launch its IPO on 01 November at an indicative price range of Rs940-980. The IPO comprises a primary raise of Rs37,500 million ($502 million) and a secondary raise up to Rs19,600 million ($262 million). The main secondary seller is SoftBank Vision Fund which aims to sell up to Rs18,750 million ($250 million) worth of shares. In PB Fintech (Policybazaar) IPO Initiation: Insurance Policy, we stated that Policybazaar, which is India’s largest digital consumer credit marketplace, is a direct play on the rising insurance penetration rates in India. PB Fintech operates an asset-light capital model and does not underwrite any insurance or retain any credit risk on loans. The business is well-positioned to benefit from the post-COVID-19 recovery in insurance policies sales and loan disbursals by its partners. Helped by strong brand recognition and retention rates, the favourable unit economics also suggest that medium-term profitability is within reach. In this note, we look at the updated prospectus which outlines the 1QFY22 results (for the quarter ending June) and recent developments. Overall, the recent results reinforce our view that PB Fintech has attractive fundamentals. We will discuss valuation in our next note.  

PB Fintech (Policybazaar) IPO: Signs of Life

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Bottom-Up

In August, <a href="https://www.smartkarma.com/entities/root-inc" target="_blank" data-smartkarma-citation="entities:29692:1" rel="noopener">Root Inc (ROOT US)</a> announced the expansion of partnership with <a href="https://www.smartkarma.com/entities/carvana-co" target="_blank" data-smartkarma-citation="entities:26471:1" rel="noopener">Carvana Co (CVNA US)</a> , the leading e-commerce platform for buying and selling used cars. Root is partnering exclusively to develop and offer an innovative and integrated auto insurance solution for Carvana’s online car buying platform. In our view, this is a great opportunity for Root Insurance to expand customer base at lower costs and get access to a growing channel of prospective Carvana’s customers. Insurtech unicorn had ~383K policyholders as of quarter ended Jun-21 while Carvana sold ~244K vehicles in 2020 and ~200K vehicles in the first half of 2021. Carvana has a market cap of ~$62 billion and will invest ~$126 million of capital in Root. Convertible preferred stock will be issued and sold to Carvana with an initial liquidation preference equal to the purchase price that will be convertible at a price of $9.00/share into ~14 million Root shares of Class A common stock. According to form 8-K, Root will issue 8 tranches of warrants, which may provide Carvana with opportunity to purchase ~129 million newly issued Root shares of Class A common stock, what translates into ~30% post-transaction stake on a fully diluted basis.

In August, Root Inc (ROOT US) announced the expansion of partnership with Carvana Co (CVNA US) , the leading e-commerce platform for buying and selling used cars. Root is partnering exclusively to develop and offer an innovative and integrated auto insurance solution for Carvana’s online car buying platform. In our view, this is a great opportunity for Root Insurance to expand customer base at lower costs and get access to a growing channel of prospective Carvana’s customers. Insurtech unicorn had ~383K policyholders as of quarter ended Jun-21 while Carvana sold ~244K vehicles in 2020 and ~200K vehicles in the first half of 2021. Carvana has a market cap of ~$62 billion and will invest ~$126 million of capital in Root. Convertible preferred stock will be issued and sold to Carvana with an initial liquidation preference equal to the purchase price that will be convertible at a price of $9.00/share into ~14 million Root shares of Class A common stock. According to form 8-K, Root will issue 8 tranches of warrants, which may provide Carvana with opportunity to purchase ~129 million newly issued Root shares of Class A common stock, what translates into ~30% post-transaction stake on a fully diluted basis.

New Exclusive Partnership With Carvana. A Turnaround Story?

United States

Metromile Inc. operates as a car insurance company. The Company offers pay-per-mile insurance and a driving applications. Metromile serves customers in the United States.

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MetroMile Inc (MILE US)

Three De-SPACs that Could Be Acquired Soon

When Chamath Palihapitiya announced that he was backing auto-insurance startup Metromile, he compared it with Buffet’s purchase of Geico.

subSPAC

PB Fintech (Policybazaar) IPO: Signs of Life

PB Fintech (Policybazaar) will launch its IPO on 01 November to raise up to $764m. The updated prospectus reinforce our view that PB Fintech has...

Arun George

New Exclusive Partnership With Carvana. A Turnaround Story?

We consider Root Insurance business as a “turnaround story” and exclusive partnership with Carvana may change the business model of insurtech unicorn

Andrei Zakharov

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