May 20, 2020 / 10:52 PM / in 15 days

Insurance comparison firm SelectQuote raises $360 million in IPO

NEW YORK (Reuters) - U.S. insurance policy comparison website SelectQuote Inc SLQT.N raised $360 million after selling shares in its initial public offering (IPO) above its target range on Wednesday.

SelectQuote’s offering is the latest sign of thawing in the IPO market, which was shut to most companies when the coronavirus outbreak fueled weeks of stock market volatility in March and April. Only a handful of biotechnology and blank-check companies went ahead with IPOs during this period.

Since late February, the Cboe Volatility Index , known as Wall Street’s fear gauge, has been above the 20-point threshold that most IPO hopefuls monitor to gauge investor jitters. But it has trended downwards in recent weeks, giving some companies confidence to test the market.

SelectQuote allows consumers to compare insurance policies for life, auto and home insurance from providers including American International Group (AIG.N), Prudential Financial Inc (PRU.N) and Liberty Mutual.

The biggest IPO by a company that is neither a biotechnology firm nor special purpose acquisition company since the onset of the pandemic was by Chinese cloud computing company Kingsoft Cloud Holdings Ltd KC.O, which raised $510 million in its U.S. stock market debut earlier this month.

Overland Park, Kansas-based SelectQuote said it sold 18 million shares as planned, and existing shareholders sold 10.5 million shares, up from 7 million, at $20 each as part of the IPO. The company had set a target range of between $17 and $19 per share.

The IPO valued SelectQuote at $3.25 billion. The pricing of the IPO was brought forward by a day on the back of strong investor demand. Shares of SelectQuote peer EverQuote Inc (EVER.O) hit a record high earlier this month, after the company increased its full-year revenue and adjusted EBITDA forecast. EverQuote also said it expects the virus outbreak to accelerate the digitization of the insurance industry. While using websites to compare and buy insurance products is commonplace around the world, the U.S. insurance industry has been slower to embrace technology as means of bypassing traditional insurance brokers.

For the nine months to the end of March, SelectQuote posted $390.1 million in revenue, up almost 50% year on year while net income edged up 2.4% to $61.1 million.

The company’s stock is set to start trading on the New York Stock Exchange on Thursday under the symbol “SLQT”.

Credit Suisse and Morgan Stanley are the lead underwriters for the IPO.

Reporting by Joshua Franklin in New York; Additional reporting by Rama Venkat in Bengaluru; Editing by Chris Reese, Leslie Adler and Shounak Dasgupta

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