Duck Creek Technologies Inc. soared on their Nasdaq debut on Friday, after the software company serving the property and casualty insurance market raised $405 million in its upsized initial public offering (IPO).
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Boston-based Duck Creek, backed by private-equity firm Apax Partners, sold 15 million shares at $27 apiece, above its target range of $23 to $25. The IPO valued Duck Creek at $3.46 billion.
Duck Creek provides software-as-as-a-service (SaaS) solutions to carriers including AIG, Geico and Liberty Mutual.
The COVID-19 pandemic is pushing the insurance sector to rely heavily on technology to reach customers, putting the focus on startups such as SoftBank-backed Lemonade Inc., which recently also priced its IPO well above the targeted range.
CEO Michael Jackowski said Duck Creek has seen an uptick in demand during the pandemic, as insurance carriers adjust operations to working remotely.
The company plans to use IPO proceeds to expand in Europe and Asia and to fund potential acquisitions.
Following the pandemic-induced slowdown in global insurtech investments during early 2020, $1.56 billion was raised in the second quarter, up 71% from the first quarter, according to the new Quarterly InsurTech Briefing from insurer Willis Towers Watson.
The property and casualty insurance business accounted for 68% of the funding.
Demand has risen for products that give customers instant access to their own information and help insurers cut costs.
Duck Creek said this week that funds advised by Apax Partners will own about 33.8% of its common stock after the IPO, and IT consulting firm Accenture will own about 22.5%.
Goldman Sachs & Co., BofA Securities and J.P. Morgan were among the bookrunners for the offering.
(Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Krystal Hu and David French in New York; Editing by Shinjini Ganguli and David Gregorio)