Classic car insurance specialist Hagerty announced that it's planning to go public in a deal with special purpose acquisition company (SPAC) Aldel Financial Inc. The deal will add Hagerty to a growing list of other insurance companies that went public via SPAC in the last year, including Hippo and Lemonade.

Hagerty got its start as an insurance agency for classic and collector cars, and is now a “an automotive enthusiast brand offering a specialty automotive insurance platform built upon a membership organization for car lovers," according to its press release announcing the deal. The Michigan-based insurance agency division of Hagerty has more than 2 million vehicles insured globally and partners with nine U.S. automobile insurers.

Over the last three years, the company has achieved more than 25% compounded annual revenue growth, according to Hagerty.

The transaction values the company at $3.13 billion and is expected to deliver up to $820 million of gross proceeds to the combined company, including the contribution of up to $116 million of cash held in Aldel's trust account from its initial public offering in April 2021. As part of the deal, Aldel has agreed to acquire all of the limited liability equity interests of Hagerty for $3 billion.

The deal is supported by a $704 million private investment led by strategic investors State Farm and Markel Corp., alongside commitments from a group of other institutional and private investors.

The transaction is expected to close in the fourth quarter of 2021 and is awaiting approval by Aldel's stockholders and Hagerty's owners, in addition to other customary closing conditions.

When the transaction closes, Aldel will be renamed Hagerty Inc., and become publicly traded, with its common stock expected to be listed on the New York Stock Exchange under the ticker HGTY. Hagerty's board of directors will consist of nine directors and will be named by Aldel, Markel and State Farm.

McKeel Hagerty, CEO of Hagerty, said the move is “an exciting step forward" and that working with Aldel will “bring extensive expertise and strategic relationships in the automotive, insurance and financial sectors that will be a key strategic advantage for Hagerty." “We believe this transaction will help to accelerate Hagerty's many growth opportunities and realize our bold mission to build the best automotive enthusiast brand in the world and save driving and car culture for future generations," he said.

“We ran an extensive process, and Hagerty represented what we were looking for in a partner for Aldel and our stockholders," says Robert I. Kauffman, chairman & CEO of Aldel. “Hagerty offers a highly differentiated growth story with a large market opportunity. The company also has a proven financial profile with a predictable and consistent revenue model and strong corporate culture and leadership model."

AnneMarie McPherson is IA news editor.