On November 13, 2018, at the Atlanta History Center, GreenSky will receive the IPO of the Year award at the 2018 Deals of the Year event. This award, granted by The Association for Corporate Growth’s Atlanta Chapter (ACG) acknowledges exceptional M&A deals and dealmakers whose work has positively impacted Atlanta and surrounding areas from July 1, 2017, through June 30, 2018. ACG Atlanta focuses on middle-market growth. It provides a safe place for executives and professionals in the region to discuss their ideas for business and growth strategy.
When GreenSky first announced that it was going public, the company expected to raise $750 million for its initial public stock offering in late May of 2018. However, in a surprising turn of events, it exceeded its expectations and went on to raise $874 million in IPO with a market cap of $2.86 billion. Honored to receive the award, the co-founder and CEO of GreenSky said in an announcement,
“As we continue to grow, now as a publicly traded company, we are excited to be part of the growing financial technology community in Atlanta. We are honored to be recognized by ACG.”
The Atlanta ACG committee decides who receives a Deals of the Year award based on a few criteria: the dealmakers execution, its value, whether or not Atlanta’s economy can grow from it, whether it has the potential to impact the national and global financial sector, and if some of Atlanta’s most esteemed businesses and investors believe in and support it.
GreenSky is a FinTech online lending company that initiates transactions at the point of sale. The company helps consumers with outstanding credit receive home improvement and elective surgery loans through GreenSky’s app or a merchant. The most surprising element of GreenSky is that it doesn’t rely on its own capital to fund these loans. Instead, the company has partnered with banks to fund the loans. Some of the banks GreenSky partners with are Regions, Fifth Third, and SunTrust.
Although bank partnerships are a momentous development for the FinTech industry, where startups seem to be at odds with banks, that’s not what makes GreenSky so noteworthy. It’s the fact that GreenSky’s merchants can help their customers get the financing they need in minutes to help them start living out their dreams.
Here’s a scenario to help you see how GreenSky works. A homeowner contacts a contractor for a renovation project for their bathroom and kitchen. The contractor comes in and assesses the situation, and then gives them a quote. The homeowner didn’t realize how much the project would cost, and lets the contractor know that they’ll have to discuss it with their bank first.
Getting approved for a loan from your bank can take anywhere from days to weeks, which leaves enough time for the homeowner to decide that the project can wait. However, since the contractor is a merchant of GreenSky, he’ll pull up the application form on GreenSky’s app, which the homeowner can then fill out. Filling out the application and waiting for approval takes less than two minutes. They could be approved for up to $55,000 and, if they are, the contractor can get the funds needed from their account and immediately start on the project. A similar scenario would occur if a patient was trying to get a cosmetic surgery done that their insurance didn’t cover. If a consumer is aware of GreenSky while searching for home improvement loans, they can go to GreenSky’s website, apply for the loan, and, if they’re approved, can go to any contractor they want to get the job done.
GreenSky teamed up with American Express to reach more merchants and customers. Now, eligible merchants in American Express’s network can offer GreenSky to their customers so they can better serve them. American Express’s merchants are just the beginning. GreenSky also plans to create a digital direct loan for American Express’s consumers, which they can then use to connect with any merchant of their choice. Although it’s still in its beginning stages, only offering home improvement loans in five U.S cities, there’s plenty of potential for it to grow.
GreenSky’s (GSKY) IPO
FinTech companies have previously shied away from going public because, in the past, they haven’t fared well in the stock market. Since FinTech is a relatively new concept, not everyone involved in the stock market is comfortable with its innovative nature. The generation that supports innovation the most are millennials and unfortunately, they aren’t the ones who invest the most in stocks.
The financial industry itself is risky, and for people to believe in a company and take a chance, the business has to be on the least risky end of the spectrum. And that’s where GreenSky falls. While the company does provide large loan amounts to consumers, it only approves those whose credit is outstanding. This risk mitigation was the reason the company’s IPO exceeded its expectations. And, although its initial offering closed, GreenSky will continue to attract more investors because of its intriguing business model.
GreenSky’s popularity is just starting to flourish. It is even expected to announce quarterly sales of $121.57 million at the beginning of November. Although the company itself has been around since 2006, it stayed fairly private and distant from the public. However, now, with its recent blockbuster IPO and partnership with American Express, more consumers, merchants, and investors will know about its disruptions to the FinTech industry.