On Wednesday, global automotive enthusiast brand and specialty insurer Hagerty announced a merger deal with a special purpose acquisition company (SPAC) to become a publicly-traded company. The deal will reportedly put the company’s valuation at $3.13 billion when it’s closed, and it will trade under the ticker HGTY.

The merger is intended to inject gross proceeds of approximately $820 million dollars into Hagerty’s move toward digital initiatives. It also provides an outlet for car-crazed people to invest in classic, rare, and exotic cars in a new way. That includes Hagerty DriveShare, a classic car rental business, as well as other unique car content and tools.

It’s an industry that’s booming right now with classic car values increasing by 193% over the past decade alone. And it appears that Hagerty has the formula for their services dialed in, boasting a 90% customer retention rate year after year.

McKeel Hagerty, CEO of Hagerty, said, “When it comes to fueling the insatiable passion of tens of millions of automotive enthusiasts, Hagerty is well-positioned as a leading specialty insurance provider with a unique subscription and membership model and portfolio of immersive automotive events, entertainment, and valuation tools. For our members, this means a comprehensive and compelling experience that goes far beyond an insurance transaction. For our business, this means market-leading brand loyalty, an attractive business model with multiple points of monetization, a track record of financial success, and a strong foundation for future growth.”

Hagerty continued, “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. As we look ahead, we are focused on investing in Hagerty’s digital user experience interfaces to support our growing membership base, while we continue to expand our portfolio with highly engaging car events and exciting services like DriveShare by Hagerty and Hagerty Garage and Social clubhouses.”

Increasing popularity throughout COVID-19

The timing for a merger is brilliant for Hagerty as the luxury and classic car markets are at historic levels. COVID-19 travel restrictions and social distancing have made more money available to Americans who purport to be automotive enthusiasts. Monterey Car Week auction sales were 35% higher than in 2019 with buyers spending a combined $345 million over the weekend.

Hagerty CEO McKeel Hagerty told CNBC, “COVID actually accelerated certain people’s interest in cars if they had it before. You know, when you’re working from home and maybe you don’t have all the choices to travel and do all the different things, cars were an easy choice for people to make. You could go out and have a fun drive, whatever car you had.”

However, he sees the style, performance, and history in these niche vehicles as a critical factor for the whole auto industry.

“Fast electric cars are fun, but if they just kind of looks like a jelly bean or something, that’s not going to be very attractive to future generations,” McKeel Hagerty said. “A lot of what makes people collect cars and want them, you know, for lifestyle enjoyment, pleasure experiences, is the way they look and the way they perform and kind of how they make you feel.”

Acquired the Concours d’Elegance of America

In addition to insuring more than two million vehicles, Hagerty acquired one of America’s premier car shows, the Concours d’Elegance of America. A precision marketing plan for the brand involves focused shows like this one that’s been around for more than four decades.

It follows their 2019 acquisitions of both the Greenwich Concours d’Elegance and the California Mille. McKeel Hagerty says events like these are how we’re going to save driving and car culture for future generations.”

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