Classic Car Specialist Hagerty to Become Public Company in SPAC Deal

August 18, 2021 by

Classic car insurance specialist Hagerty is planning to go public in a deal with special purpose acquisition company Aldel Financial Inc. Upon the closing of the transaction, Aldel will be renamed Hagerty, Inc., and become publicly traded, with its common stock expected to be listed on the New York Stock Exchange under the ticker HGTY.

The transaction values the company at $3.13 billion and is expected to deliver up to $820 million of gross proceeds to the combined company, including the contribution of up to $116 million of cash held in Aldel’s trust account from its initial public offering in April 2021. The combination is supported by a $704 million private investment led by strategic investors State Farm and Markel Corp. and commitments from a group of other institutional and private investors.

As part of the deal, Aldel has agreed to acquire all of the limited liability equity interests of Hagerty for $3 billion.

For Michigan’s Hagerty, Insurance Is Just the Start

The transaction, which has been unanimously approved by Aldel’s board of directors and the independent members of Hagerty’s board, is expected to close in the fourth quarter of 2021. It is subject to approval by Aldel’s stockholders and Hagerty’s owners and other customary closing conditions. Aidel said more than 40% of Aldel’s stockholders have already signed voting agreements in favor of the transaction.

Immediately following the closing, the new Hagerty’s board of directors will consist nine directors, including ones named by Aidel, Markel and State Farm.

The Michigan-based insurance agency division of Hagerty has more than 2 million vehicles insured globally, a unique membership model and partnerships with nine U.S. automobile insurers.

The company’s portfolio includes the Hagerty Drivers Club, more than 2,500 automotive events annually (including the recently acquired Amelia Island Concours d’Elegance), an expanding automotive media content platform, and Hagerty’s proprietary valuation tools.

Hagerty said its has achieved greater than 25% compounded annual revenue growth rate over the last three years and average loss ratios significantly lower than the U.S. personal lines auto insurance industry.

McKeel Hagerty, CEO of Hagerty, said the firm believes this transaction will help to “accelerate Hagerty’s many growth opportunities and realize our bold mission to build the best automotive enthusiast brand in the world and save driving and car culture for future generations.”

He said the firm will focus on investing in Hagerty’s digital user experience and expanding its portfolio with car events and services.

Robert I. Kauffman, former co-founder of Fortress Investment Group and chairman and CEO of Aldel, said Hagerty offers a “highly differentiated growth story with a large market opportunity” and offers “a proven financial profile with a predictable and consistent revenue model and strong corporate culture and leadership model.”

In taking the SPAC route to going public, Hagerty joins several other insurance firms including Hippo, Kin and Policygenius.