Porch Group has arranged an at-the-market stock sale program that could put as many as 15 million shares into the market over time. The program has two parts: Porch’s insurance affiliate may sell shares it already owns, while Porch itself may issue and sell new shares.
The two parts have different financial effects. Proceeds from the affiliate’s sales would go to the affiliate, not Porch; only sales of newly issued Porch shares would raise cash for the parent company.
Key details
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Porch Reciprocal Exchange may sell up to 10 million existing Porch shares. It currently holds about 16.2 million shares. The sales would convert some of that stock into cash that can count as an admitted asset on the insurer’s statutory financial statements, addressing limits and restrictions under Texas insurance law.
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The affiliate may use its proceeds for general corporate purposes, including improving its surplus and liquidity, diversifying its assets, funding acquisitions, meeting regulatory requirements, maintaining its financial stability rating, or paying claims and expenses.
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Porch may issue and sell up to 5 million new shares. Porch would receive the net proceeds, which it may use for general corporate purposes. If all 5 million are sold, the issuance would increase the number of shares outstanding and dilute existing shareholders’ ownership.
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The sales are optional and may occur over time at market prices. Neither Porch nor the affiliate is required to sell any shares. StoneX Financial will act as sales agent, following instructions that may set limits on price, timing or sale size.
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The sales agent’s commission is 1.5% of gross proceeds from shares sold. Porch will also reimburse certain specified expenses.
What changes for investors
The program creates potential market supply of up to 10 million shares from the affiliate and up to 5 million newly issued shares from Porch. The affiliate sales would not raise cash for Porch or add new shares to the outstanding total; the company’s own sales would raise cash but could dilute shareholders. Neither portion is guaranteed to proceed or to reach its maximum amount.