Hippo has become the latest InsurTech with plans to go public through a reverse merger transaction with a Special Purpose Acquisition Company.

The startup – an MGA focused on digital homeowners insurance, will be acquired by Reinvent Technology Partners Z in a deal that values the company at $5 billion. This type of transaction helps Hippo raise substantial capital and hit the public markets without holding a risker initial public offering.

“Through this strategic partnership with Reinvent and an incredible team of world-class entrepreneurs, investors, and employees, we can’t wait to transform the homeowner experience and accelerate our growth,” Hippo Co-founder and CEO Assaf Wand said in prepared remarks.

The boards of directors at both Hippo and Reinvent have unanimously approved the transaction, which is expected to close in mid-2021, the companies said, pending various closing conditions. Reinvent shareholders and Hippo stockholders also must approve the deal.

The combined company is expected to have approximately $1.2 billion in cash at closing, including up to approximately $230 million of cash held in Reinvent’s trust account from its initial public offering on November 23, 2020.

A $550 million PIPE (public investment in private equity) transaction is also part of the equation, led by current investors including Dragoneer, Lennar and Ribbit. “Top tier” mutual funds and Reinvent Capital also joined the PIPE, Hippo said. After the merger closes, Hippo’s existing stockholders are expected to own approximately 87 percent of the combined company.

Additionally, Reinvent and Hippo have agreed to a long-term lock-up on founder shares for up to two years, and a robust earnout structure with full vesting not realized until the share price reaches $20 per share. Major stockholders and key executives of Hippo have agreed to enter into separate lockup agreements as well.

As part of the deal, a Reinvent appointed director will join Hippo’s Board of Directors once the transaction closes.

Palo Alto, California-based Hippo had eyed an IPO in 2021 , Wand said months ago. The company raised $150 million in July, from investors including Dragoneer and Ribbit Capital, and pulled in another $350 million investment from Mitsui Sumitomo in November.

Hippo acquired two companies in 2020, including Spinnaker Insurance Company, a national insurance carrier licensed in all 50 states with a Financial Strength Rating of A-(Excellent) from A.M. Best. It also offers its Smart Home program (stemming from its acquisition of the startup Sheltr), which is designed to help prevent problems such as water damage, fires and break-ins. As well, it uses live data to anticipate and track weather events so its claims team can reach out in advance and help protect homeowners, the company said.

Hippo Insurance Services provide home insurance products in 32 states at present, with plans to reach 95 percent of the population by the end of 2021. Hippo said it has also developed “meaningful partnership distribution channels” including home builders and mortgage servicers.

Source: Hippo/Reinvent Technology Partners