Fintech Startup Moves Toward Listing -- WSJ
April 03 2018 - 3:02AM
Dow Jones News
GreenSky could raise $1 billion in an online lending sector that
has seen few listings
By Peter Rudegeair and Maureen Farrell
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 3, 2018).
Financial-technology firm GreenSky LLC has confidentially filed
paperwork with the Securities and Exchange Commission for a sizable
initial public offering that could come as soon as this summer,
according to people familiar with the matter.
The Atlanta company, which operates a lending platform that
enables retailers, health-care providers and home contractors to
offer loans to their customers, could seek to raise $1 billion at a
valuation of roughly $5 billion, some of the people said.
An IPO of GreenSky, backed by a number of Wall Street
heavyweights, would end the drought in IPOs of financial-technology
companies.
There is no guarantee GreenSky will proceed with an IPO. It may
do another private share sale instead of a listing, some the people
said.
Despite the large amount of financing that private investors
have poured into lending startups, IPOs have been rare in recent
years due in part to concerns around rising defaults among their
borrowers and increased competition.
And those that have tapped the public markets have struggled.
Shares in online lenders LendingClub Corp. and On Deck Capital Inc.
were recently down 86% and 77%, respectively, from their IPO prices
when they debuted in December 2014.
If GreenSky manages to raise $1 billion in a debut, it would be
in rare company. Since 2015, just six U.S.-listed technology
companies have raised that much or more, according to data provider
Dealogic.
Last year, GreenSky was in talks to go public through an
acquisition by CF Corp., a "black-check" company run by former
Blackstone Group LP partner Chinh Chu, but the talks ultimately
fizzled, according to a person familiar with the matter.
Companies now have the option to file an initial draft of their
IPO prospectus with regulators and make adjustments before
unveiling it publicly.
While Wall Street investors have been wary of LendingClub and On
Deck Capital, GreenSky's business model has clear distinctions.
Unlike those companies, GreenSky doesn't make loans directly. It
arranges financing of up to $55,000 for customers of
home-improvement retailers such as Home Depot Inc. and over 16,000
other merchants and service providers. A network of banks,
including Fifth Third Bancorp, SunTrust Banks Inc. and Regions
Financial Corp., fund the loans and hold them on their balance
sheets.
As a private company, GreenSky doesn't release financial metrics
but Moody's Investors Service said in a recent report that the
company's projected annual revenue was over $400 million and
expected to increase by more than 20% in the next year. GreenSky is
on track to generate more than $200 million in earnings before
interest, taxes, depreciation and amortization in 2018, people
familiar with the matter said.
In late 2017, GreenSky raised $200 million from Pacific
Investment Management Co. in a deal that valued the company at
nearly $4.5 billion, The Wall Street Journal previously reported.
Earlier investors in GreenSky include Fifth Third, asset managers
TPG and Wellington Management Co. and venture-capital firms DST
Global and QED Partners.
A successful IPO of GreenSky could encourage a host of fintech
companies that have been weighing public offerings to move
forward.
U.K.-based online lender Funding Circle Ltd. is considering an
IPO this year on the London Stock Exchange, and Dutch payments
company Adyen BV is weighing a listing this year on the New York
Stock Exchange.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com and Maureen
Farrell at maureen.farrell@wsj.com
(END) Dow Jones Newswires
April 03, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Fifth Third Bancorp (NASDAQ:FITB)
Historical Stock Chart
From Aug 2024 to Sep 2024
Fifth Third Bancorp (NASDAQ:FITB)
Historical Stock Chart
From Sep 2023 to Sep 2024