Inexperienced Dot Company (GDOT) (~$715MM market capitalization) is likely one of the unique fintech companies concentrating on the underbanked inhabitants in america who primarily reside paycheck-to-paycheck. They supply accessible monetary merchandise like pay as you go debit playing cards, secured bank cards, cash processing providers, tax refund processing providers each underneath their very own identify and white labeled with companions (Walmart, Apple, Amazon, Intuit, Jackson Hewitt, PLS, Uber, and many others). The top shopper can entry their cash within the more and more non-cash world with out a conventional checking account. Inexperienced Dot supplies back-office banking providers for their very own shopper providers and by way of third social gathering companions via their financial institution, Inexperienced Dot Financial institution.
Inexperienced Dot’s historical past has a variety of twists and turns I will gloss over (it has been a poor funding since its 2011 IPO), nevertheless again in November, Inexperienced Dot introduced they have been coming into right into a transaction the place they’re separating the fintech enterprise from the financial institution:
The fintech enterprise that buyers are aware of goes to a agency referred to as Smith Ventures. Invoice Smith, founding father of Smith Ventures, is a serial entrepreneur who had beforehand based Perception Card Providers, which he bought to GDOT in 2014 and Shipt which he bought to Goal (TGT) in 2017 for $500MM. After these transactions, in 2017 he helped fund/discovered CommerceOne (presently privately held), a de novo financial institution primarily based in Alabama, whose management group got here from First Companions Financial institution after it was acquired by Progress Financial institution (which merged with UCBI in 2023) that very same 12 months. Smith is on the board of CommerceOne and presumably the architect behind this complete transaction, there are few articles floating round about him, he is a little bit of a rags-to-riches story and appears to have a profitable observe file at a comparatively younger age of 40.
With GDOT buying and selling at $12.28/share, I’ve the stub worth to the BankCo buying and selling just below 70% of tangible e-book worth, properly under the place comparable (however extra established) friends commerce.
Financial institution mergers may be difficult, I think about this one can be significantly so since pre-GDOT CommerceOne is buying a financial institution a number of occasions its dimension, has principally a distant workforce no the place close to Birmingham and options integrating a very new enterprise mannequin. Different dangers related to proforma CommerceOne embody publicity to Inexperienced Dot (7-year preliminary deal), Apple and WalMart focus threat on the fintech stage and regulatory dangers related to serving this buyer base (though the CPFB has been considerably neutered). I discover this to be a horny setup, the deal is predicted to shut mid-2026, it’s going to probably take one other 12 months or two for the financial institution to commerce extra inline with friends however has important upside.
Disclosure: I personal shares of GDOT