Centerbridge Partners has invested $100 million in TypTap Insurance Group, an insurtech subsidiary of HCI Group in Tampa.
The investment implies a post-money valuation for TypTap of approximately $850 million, a news release said. Centerbridge, a private investment firm, will own about 12 percent of TypTap. TypTap could become a separate publicly traded company in the future under terms of the deal.
TypTap is an artificial intelligence-enabled technology company created by HCI (NYSE: HCI) and launched in 2016, in response to agents’ need for efficiency, as Paresh Patel, CEO of HCI and of TypTap, and Kevin Mitchell, TypTap president, told St. Pete Catalyst publisher Joe Hamilton in a 2020 interview.
TypTap provides homeowners and flood insurance and currently operates in Florida with plans to expand its operations nationwide. The company has received regulatory approval to expand in 10 additional states with approvals pending in another nine states.“This capital infusion will enable TypTap to pursue its national expansion plans rapidly and to continue developing innovative insurance-related technologies. We will immediately begin preparing TypTap for future growth. Centerbridge will be a valuable partner in all our efforts and we look forward to working with them,” Patel said.
Related: Paresh Patel, HCI Group
Centerbridge, with strong experience in the insurance and insurtech space, received preferred shares from TypTap and warrants, or the right to buy stock in the future, from HCI.
The TypTap preferred shares automatically convert to common shares upon completion of an initial public offering meeting certain parameters.
The four-year warrant gives Centerbridge the right to buy 750,000 HCI common shares at $54.40 a share. HCI stock closed Friday at $57.87 a share, before the Centerbridge investment was announced.
Centerbridge also will be able to appoint one director to both the HCI and TypTap boards of directors.
“We have been enthusiastically observing TypTap’s growth trajectory and progress over the last couple of years and are particularly impressed by what the leadership team has been able to accomplish with respect to profitably scaling its insurtech platform,” said Eric Hoffman, managing director at Centerbridge.
JPMorganChase & Co. acted as sole placement agent on the transaction. Foley & Lardner acted as legal advisor for HCI Group and Kirkland & Ellis LLP acted as legal advisor for Centerbridge.
HCI is one of the largest companies headquartered in the Tampa-St. Pete area, with technology and real estate operations in addition to insurance.