Online used-car retailer Shift has announced plans to go public, confirming rumors reported last week.
The company plans to go public through a merger with Insurance Acquisition Corp. (NASDAQ:INSU), a publicly traded company that investors have set up for the express purpose of raising funding for Shift.
So far, investors have committed $185 million U.S. in equity capital, in addition to potential proceeds from a company trust, which currently stands at more than $150 million, according to statement from Shift.
Shift hopes to close the deal by the end of Q3, provided it clears an SEC review and receives regulatory and stockholder approvals, according to the statement.
If the deal goes through, Insurance Acquisition Corp. will change its name to Shift Technologies and the company will be traded on the NASDAQ under a new symbol.
The announcement comes in the wake of successful fundraising by two major competitors, and expansion plans by a new market entrant.
Carvana recently sold off $5 million of its shares, cashing in on a stock market rally that brought its share prices to a near all-time high. A few days later, another Shift competitor, Vroom, debuted on the NASDAQ and raised $468 million, well above the company’s target.
This week, a newer entrant in the field, Gettacar, announced it would expand into the Washington, D.C. market. Gettacar currently operates in Philadelphia and Baltimore.
Like Gettacar, Shift is a smaller player that operates in a limited number of markets, most of which are in California. The company also operates in Portland, Ore. Shift says that in its best developed market, an unspecified city in the Bay Area, it has achieved market penetration of 4%.
Although things are now looking up for Shift, the company was badly hit by the pandemic. In March, a slump in sales forced the company to furlough half its staff, and to cut the pay of its salaried employees by 25 percent.