There has been a lull in US based fintech IPOs over the past several years. Both LendingClub and OnDeck went public in late 2014. At the time I thought it would open the floodgates for other more established fintech players, a story which did not come to fruition. Since then we have mostly seen IPOs from Chinese based fintechs such as Yirendai and China Rapid Finance.
This morning, GreenSky broke the streak, listing on the Nasdaq under ticker GSKY.
? #FunFact: Atlanta-based @greenskypay has facilitated more than $10 billion in loans for home improvement projects via a network of 16,000 contractors. #GreenSkyIPO pic.twitter.com/FVqTbmmmml
— Nasdaq (@Nasdaq) May 24, 2018
There is a lot that sets GreenSky apart from many of the fintech companies that exist today. The biggest differentiator is that the company is profitable and runs a high margin business. In fact, the company has been profitable for the last five years. They reported $139 million in net income on revenues of $326 million last year. They also have a highly differentiated, boots on the ground model to originating loans, empowering contractors to offer financing to homeowners at the point of sale. They also partner with other types of merchants to offer financing. GreenSky only holds a small portion of loans on their own balance sheet with most loans being funded through around 15 bank partners.
Forbes did an excellent profile on their David Zalik back in September 2017 which shares exactly how the business operates. We learned at that time, Zalik still owned more than half of the company. GreenSky’s IPO priced at the top end of their estimated range at $23. They offered 38 million shares which means the company raised $874 million. At time of writing, GreenSky was trading around their IPO price.
Conclusion
It’s going to be interesting to both watch GreenSky as a public company and also keep an eye on what this means for other fintech companies who may want to go public. There are a few IPOs on the horizon with Lufax in China and Funding Circle in the UK, but there are no other near term plans for US fintech IPOs that we know. Last week we learned that iZettle wouldn’t be doing an IPO as PayPal swooped in and bought the company.
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