Carvana to invest $126 million in Root
E-commerce platform for buying and selling used cars Carvana and insurer Root Insurance are teaming up to develop integrated auto insurance solutions for Carvana’s online car buying platform. In connection with the partnership, Carvana will invest ~$126 million in Root, subject to customary regulatory approvals.
“In Root, we have found a partner that shares our customer focus and technology-driven approach to delivering exceptional customer experiences. We are excited to build on the success of our existing partnership by creating a unique, integrated solution. We look forward to introducing our customers to Root’s seamless insurance process and believe that this integrated offering will deepen and extend our customer relationships between transactions.” – Carvana CEO Ernie Garcia.
“Carvana has revolutionized the used car buying experience for consumers. This partnership further elevates the Carvana experience by integrating insurance alongside car purchasing and financing decisions. This integrated solution will give Root exclusive access to a scaled and growing channel of prospective customers at the important insurance decision point of buying a car, which positions us to deliver on an immediate customer need and drive sustainable policyholder growth.” – Root CEO Alex Timm.
Under the terms of the investment agreement, Carvana will invest approximately $126 million of primary capital in Root, in a convertible preferred security, convertible at $9.00 per share, into approximately 14 million Class A shares in Root, or an ownership interest of approximately 5% on a fully diluted basis as of today. The investment agreement also provides Carvana with warrants for Class A shares in Root, that are linked to the performance of the commercial partnership.