Green Dot Corp., the largest U.S. provider of reloadable prepaid debit cards, jumped 22 percent after convincing buyers to pay more than the forecast price range for its $164 million initial public offering.
Shares of Green Dot climbed $7.99 to $43.99 Thursday after management and stakeholders sold 4.56 million shares at $36 each on Wednesday, according to Bloomberg data. The Monrovia, Calif.-based company initially offered 3.85 million shares for $32 to $35 before increasing the size of the offering, its filings showed. Based on the original terms, the deal would have generated instant profits of 801 percent for its owners, which paid an average $3.72 per share. Green Dot's shareholders include Wal-Mart Stores Inc. and Sequoia Capital.
Investors paid a premium to own Green Dot, which has doubled its earnings every year since 2006, even as 38 companies postponed or withdrew their IPOs in the U.S. this year. At the original midpoint offer price, Green Dot was valued at 27 times 2010 profits, more than competitors from Visa Inc. to MoneyGram International Inc. and Higher One Holdings Inc.
"It's the unique deal where perhaps there isn't a public equity alternative or a high-profile deal investors are comfortable with that will likely succeed," said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. "Given the level of uncertainty right now and the choppiness, the average IPO is going to be met with a fair degree of concern or skepticism."
JPMorgan Chase & Co. and Morgan Stanley of New York led the sale, while Green Dot turned to Fenwick & West LLP in Mountain View, California, for legal advice. Cravath, Swaine & Moore LLP in New York represented the underwriters.
Ameresco Inc., the Framingham, Mass.-based contractor that helps companies improve energy efficiency, also sold shares yesterday, raising $87 million in an offering led by Bank of America Corp. of Charlotte, North Carolina.
The Ameresco sale, at $10 a share, was 38 percent less than the original amount sought after buyers rejected terms as high as $16 a share, according to its regulatory filing and Bloomberg data. The shares rose 1.7 percent to $10.17 in New York.
Green Dot sought to tap investor demand in one of the fastest growing segments of the U.S. payments market. The industry, which collects fees from consumers when they buy and use prepaid cards, has gained customers as banks tightened lending standards.
