Classic car insurance company Hagerty is going public via a special purpose acquisition company, in a deal valued at more than $3 billion.
The merger with Aldel Financial will provide stock market investors with a way to invest in the fast-growing classic car market, which has seen a huge run-up in valuations and popularity in recent years. Values for classic cars are up 6% over the past year, and 193% over the past decade, according to the Knight Frank Luxury Investing Index.
Aside from offering insurance, Hagerty has also launched a classic car rental business, called Hagerty DriveShare, and has acquired events and other classic car related businesses, including valuation tools, memberships and specialty content for car enthusiasts.
Classic car prices have benefited from the pandemic, as a new wave of investors started acquiring classic cars online through sites like Bring a Trailer Auctions, which is now owned by Hearst Autos. At Monterey Car Week, which wrapped up Sunday, total auction sales for classic cars were up 35% over 2019, to $345 million.
“Covid actually accelerated certain people’s interest in cars if they had it before,” Hagerty CEO McKeel Hagerty told CNBC. “You know, when you’re working from home and maybe you don’t have all the choices to travel and do all the different things, cars were an easy choice for people to make. You could go out and have a fun drive, whatever car you had.”
Hagerty said it insures more than 2 million vehicles globally and has partnerships with nine of the top 10 U.S. automotive insurers. The company estimates that the market for classic cars and specialty cars is more than 43 million vehicles.
The deal with Aldel includes a $704 million private investment in public equity, or PIPE, led by insurer State Farm and Markel Corp. The merger is expected to bring $820 million of gross proceeds to the merged company.
Aldel, which raised $115 million in its April initial public offering, was founded by Robert Kauffman, a co-founder of Fortress Investment Group and a racing team owner and driver. After the deal closes, the company will start trading on the New York Stock Exchange under the ticker symbol HGTY.
(Except for the headline, this story has not been edited by The Technology Express staff and is published from a syndicated fee)
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