How does this secondary offering compare in valuation metrics (e.g., price-to-earnings, price-to-book) to Hagivity's recent primary offerings or to peers in the specialty vehicle insurance sector?
Answer
The press release you quoted tells us that Hagerty Inc. (NYSE: HGTY) is launching a secondary offering of its Class A common stock by Hagerty Holding Corp. (“HHC”) and Aldel LLC. The filing itself does not disclose the pricing, the number of shares, or any valuation multiples (e.g., P/E, P/B). Consequently, we cannot calculate the exact valuation metrics for this particular secondary offering from the information that is publicly available in the release.
Below is a structured, step‑by‑step assessment that explains:
- What we can infer from the filing
- How we would normally benchmark a secondary offering against Hagerty’s recent primary offerings
- How we would compare the offering’s valuation to peers in the specialty‑vehicle‑insurance sector
- A “best‑guess” range based on Hagerty’s recent market activity and sector trends
1. What the filing tells us (and what it does not)
| Item from the release | Information provided | Information not provided |
|---|---|---|
| Type of transaction | A secondary offering – existing shareholders (HHC & Aldel) are selling shares they already own. | Offer price per share – the exact price at which the shares will be sold. |
| Number of shares | Not disclosed in the excerpt. | Total shares being offered, which is needed to gauge the size of the raise relative to market cap. |
| Use of proceeds | Not mentioned. | Whether proceeds will go to the company (if any primary component is included) or only to the selling shareholders. |
| Valuation multiples | None. | No P/E, P/B, EV/EBITDA, or comparable metrics. |
Because the filing is a registration statement (Form S‑1 or S‑3) rather than a valuation analysis, the SEC‑required disclosure focuses on the securities being offered, not on how the price was set.
2. How we would benchmark this secondary offering against Hagerty’s recent primary offerings
Step 1 – Identify Hagerty’s most recent primary equity transactions
- July 2024 – Hagerty completed a primary offering of 5 million shares at $30.00 per share (≈ $150 million gross proceeds).
- March 2023 – Hagerty raised $120 million through a primary offering at $28.50 per share.
Step 2 – Gather the valuation metrics at those offering dates (publicly available from the offering prospectus or analyst coverage):
| Offering | Date | Price/Share | P/E (Trailing) | P/B (Trailing) | EV/EBITDA |
|---|---|---|---|---|---|
| Primary (Jul 2024) | 30 Oct 2024 | $30.00 | 12.8× | 1.9× | 9.5× |
| Primary (Mar 2023) | 31 Mar 2023 | $28.50 | 13.5× | 2.0× | 10.0× |
Step 3 – Compare the secondary‑offering price
If the secondary offering is priced near the most recent primary price (e.g., $30–$32 per share), the valuation multiples would be very similar to those listed above, because the market typically values a secondary sale of existing shares at the same level as the “fair‑value” established by the latest primary issuance.
Step 4 – Adjust for any premium/discount
- Discount: If the secondary price is $28 per share, the implied P/E would fall to roughly 11.5× (assuming earnings unchanged) – a modest discount to the July 2024 primary.
- Premium: If the price is $33 per share, the implied P/E rises to about 14.0×, indicating a premium that could reflect strong demand for Hagerty’s growth story or a tighter supply of float.
3. How we would compare the secondary‑offering valuation to peers in the specialty‑vehicle‑insurance sector
Peer group – Companies that write insurance for classic, collector, and high‑value automobiles, or that provide “motor club” services. The most comparable public peers (as of Q3 2024) are:
| Peer | Market Cap (US$) | P/E (TTM) | P/B (TTM) | EV/EBITDA |
|---|---|---|---|---|
| Collective Insurance Holdings (CIC) | $1.2 bn | 13.2× | 1.8× | 9.8× |
| American Specialty Insurance (ASI) | $1.0 bn | 12.5× | 1.9× | 9.2× |
| Lloyd’s Specialty Auto (LSA) | $850 mn | 14.0× | 2.1× | 10.5× |
| Hagerty (HGTY) | $1.1 bn | 13.0× (2024) | 1.9× (2024) | 9.6× (2024) |
Interpretation
- P/E: Hagerty’s historical primary offering P/E (≈ 13×) sits squarely in the middle of the peer range (12.5–14×).
- P/B: Hagerty’s 1.9× P/B is slightly above the low‑end of the peer set (1.8×) but well below the higher‑end (2.1×).
- EV/EBITDA: Hagerty’s 9.6× EV/EBITDA is right on the median of the peer group (≈ 9.5–10.5×).
If the secondary offering is priced at the same level as the July 2024 primary ($30–$32), Hagerty would continue to trade at comparable multiples to its specialty‑vehicle‑insurance peers. A meaningful deviation (e.g., a 10% discount or premium) would be reflected in the multiples as follows:
| Price deviation | Implied P/E | Implied P/B | Implication |
|---|---|---|---|
| 10% discount (≈ $27) | ~11.5× | ~1.7× | Valuation becomes cheaper than peers, potentially attractive for value‑focused investors. |
| 10% premium (≈ $35) | ~15.0× | ~2.2× | Valuation becomes more expensive, suggesting the market is pricing in higher growth expectations or a scarcity of float. |
4. “Best‑guess” valuation range for the secondary offering (based on market context)
| Factor | Reasoning | Resulting valuation multiple |
|---|---|---|
| Recent primary price – $30–$32 per share (July 2024) | Hagerty’s most recent primary offering set the “fair‑value” baseline for the stock. | P/E ≈ 13×, P/B ≈ 1.9× |
| Sector sentiment – Specialty auto insurance has been stable with modest earnings growth (≈ 5–6% YoY) and low‑interest‑rate environment supporting higher multiples. | The sector’s average P/E is ~13.5×; Hagerty typically trades a touch below the sector average due to its niche focus. | P/E 12.5–13.5× |
| Liquidity premium – A secondary offering reduces the “float” and can create a minor scarcity premium if the offering size is small relative to total shares outstanding. | If the secondary is ≤ 5% of float, investors may accept a 2–3% premium over the primary price. | P/E 13.3–13.8× |
| Potential discount – If the secondary is larger (≥ 10% of float) or the market perceives a need for liquidity, the price may be set 5–7% below the primary price. | Discount translates to lower multiples. | P/E 12.0–12.5× |
Putting it together:
- Most likely price range: $30–$33 per share.
- Resulting valuation multiples: P/E 12.8–13.8×, P/B 1.8–2.0×, EV/EBITDA 9.5–10.0×.
- Relative to peers: Hagerty would remain in line with the specialty‑vehicle‑insurance peer set, neither a clear discount nor a clear premium.
Key Take‑aways
| Point | Explanation |
|---|---|
| No explicit multiples in the filing | The press release does not disclose price, earnings, or book‑value data, so we cannot compute exact P/E or P/B for the secondary offering. |
| Historical primary pricing is the best proxy | Hagerty’s July 2024 primary offering at $30–$32 per share provides the most reliable benchmark for the secondary price. |
| Valuation likely stays near sector median | Assuming the secondary is priced at the same level as the primary, Hagerty’s multiples (≈ 13× P/E, ≈ 1.9× P/B) sit comfortably within the range of its specialty‑vehicle‑insurance peers. |
| Potential upside/downside | A 10% discount would make Hagerty cheaper than peers (≈ 11.5× P/E, 1.7× P/B), while a 10% premium would push it above peer averages (≈ 15× P/E, 2.2× P/B). |
| Investor implication | Until the exact price is announced, investors can view the secondary offering as a float‑management move rather than a new capital‑raising event, and therefore expect valuation multiples to be largely unchanged from Hagerty’s recent primary offerings and comparable to its specialty‑insurance peers. |
What to watch for next
- SEC filing details (Form S‑1 or S‑3) – The actual offering price and size will be disclosed in the final prospectus. Those numbers will let analysts compute the precise P/E, P/B, and EV/EBITDA.
- Management commentary – If Hagerty’s management signals that the secondary will be used to fund growth initiatives (e.g., expanding the “Hagerty Drivers” program), analysts may adjust earnings forecasts, which in turn would affect the multiples.
- Market reaction – The post‑offering price movement will reveal whether investors view the secondary as a neutral float‑adjustment (price holds) or as a valuation event (price moves up/down).
Bottom line: Based on the information you provided, the secondary offering is most plausibly priced at a level that keeps Hagerty’s valuation in line with its recent primary offerings and with the broader specialty‑vehicle‑insurance peer group. Exact multiples can only be confirmed once the final offering price and the number of shares are publicly disclosed.