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Lemonade targets $466mn in net proceeds from new share sale

Lemonade has announced a sale of new shares to raise an estimated $466.1mn, with existing investors also to sell a tranche of stock.

The InsurTech said it will sell three million new shares, rising to almost 3.7 million if a greenshoe is used. Selling shareholders are offloading another 1.52 million securities.

The carrier's $466.1mn estimate of net proceeds from the new share issuance is based on Lemonade's January 8 closing price of $160.74 and the base three million new share offer. This would lift Lemonade's total common stock outstanding to almost 59.6 million shares. 

Lemonade’s shares rallied an additional 14% to $183.26 a share in Monday’s trading, but fell 7% after hours following the share issuance announcement.

In an S-1 filing, Lemonade said it expects to use the proceeds from the sale for general corporate purposes, which could include the acquisition of or investment in new businesses. Currently the insurer does not have any agreements or commitments for material acquisitions or investments.

Of the new shares being issued, one million are reserved for issuance under the carrier’s 2020 employee stock purchase plan.

Since its debut on the New York Stock Exchange in July last year, the InsurTech’s stock price has increased by more than six-fold.

It is one of several InsurTech companies seeking either to raise additional capital or float publicly, including Metromile, which in November announced it would list via a Cohen & Company-backed special purpose acquisition company. Lemonade and Root held IPOs earlier this year.

Homeowners' insurance specialist Hippo in July completed a $150mn series E round, which increased its valuation by 50% to $1.5bn. It said it would use the funding to expand into more US states.

Goldman Sachs, Morgan Stanley, Allen & Company and Barclays are Lemonade's underwriters, with their greenshoe option to purchase up to 678,647 of stock at the offer price valid for 30 days. If this over-allotment option is used, Lemonade would have almost 60.3 million common stock outstanding after the sale. 

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