Green Dot’s Move to Texas May Be Just the Start for CEO Henry

The current information that Inexperienced Dot Corp. plans to maneuver its headquarters to Austin, Texas, earlier than the top of the 12 months most likely shouldn’t have been that stunning.

In any case, a number of Southern California corporations have both moved to the Texas capital or have talked about transferring there recently.

Within the case of Pasadena-based Inexperienced Dot, although, the relocation announcement on Might eight probably has much less to do with enterprise or financial situations in Los Angeles and extra to do with the brand new particular person calling the pictures on the fintech firm.

Dan Henry, who was named chief government and president at Inexperienced Dot final 12 months simply because the Covid-19 pandemic took maintain, is a longtime Austin resident who remained within the metropolis even after taking the Inexperienced Dot job, in response to the corporate’s spokesperson.

His LinkedIn profile outlines a few of his investments in Texas, together with Second Motor Co., a tiny Austin firm that converts classic head-turning vehicles into trendy electrical automobiles with Tesla batteries and highly effective engines.

Henry additionally ran Austin-based fintech Netspend Corp., a Inexperienced Dot rival, from 2008 to 2014. He took the corporate public in 2010 earlier than promoting it in July 2013 to Whole Methods Providers, or TSYS, in a deal valued at $1.four billion.

As well as, Henry has been engaged within the Texas enterprise capital neighborhood, increase fintech fashions like Gig Wage Inc., a Dallas-based fintech that goals to simplify payroll for the gig financial system.

“He’s lived right here numerous years,” stated Julie VerHage, writer of Fintech At this time, a commerce publication in Austin that tracks the business.
 
Fintechs and insurtechs are constructing scale alongside Austin’s Sand Hill Highway, in response to VerHage. The world, she stated, has attracted a crucial mass of entrepreneurs and enterprise capital companies.

A Inexperienced Dot spokeswoman stated the corporate, which was based in Pasadena 22 years in the past, wouldn’t utterly go away California.
 
Key workers, she stated, would stay in Southern California as the corporate builds out hubs across the nation — together with the brand new headquarters in Austin, in addition to WeWork-style workplaces in Tampa, Fla.; Cincinnati; and Pasadena.

“It’s extra of a technical change than the rest,” the spokeswoman stated.

Shaking issues up

The transfer to Austin isn’t the one manner Henry is shaking up Inexperienced Dot’s operations — and Wall Road is taking word.
 
Inexperienced Dot’s principal line of enterprise is federally insured pay as you go debit playing cards that can be utilized to make funds and purchases and withdraw money. Inexperienced Dot playing cards are bought at retailers corresponding to CVS, Ceremony-Help and Walmart.  

However solely making transactions isn’t sufficient to construct a enterprise. The corporate has reported numerous initiatives to rebuild its footing available in the market.
 
One instance of an effort to generate extra income got here on Might 14 when Inexperienced Dot agreed to pay $165 million for the tax refund processing enterprise unit of Louisville-based Republic Bancorp Inc., increasing its presence within the tax phase area.

“We imagine this acquisition makes Inexperienced Dot one of many clear leaders within the area because it is without doubt one of the largest processors of tax refund disbursements in the USA,” stated Robert Napoli, a analysis analyst with William Blair & Co. in Chicago, who follows the corporate.
 
The 2 corporations stated they count on to shut the deal earlier than the top of the 12 months.

Inexperienced Dot entered the tax phase when it acquired the Santa Barbara Tax Merchandise Group in 2014.  

One other space of potential development for Inexperienced Dot got here in January when it launched its cell financial institution GO2bank app, designed to assist people who’re residing paycheck to paycheck.
 
A half-dozen Wall Road analysts wrote in analysis notes that they’re intrigued by GO2bank however need extra particulars on how a lot income the product may generate earlier than they’ll make monetary forecasts.
 
Go2bank, in response to Inexperienced Dot, addresses the wants of customers with overdraft safety, a rewards program, high-interest financial savings and credit score constructing.

Truist Securities analyst Andrew Jeffrey, in San Francisco, wrote in a analysis word to buyers that near-term upside in Inexperienced Dot inventory “may very well be capped by lack of financial element.” 

Extra strikes forward?

Henry’s arrival at Inexperienced Dot in March 2020 gave the corporate an opportunity at a reset after founder and Chief Govt Steve Streit and Chief Monetary Officer Mark Shifke retired as the corporate’s inventory misplaced greater than two-thirds of its worth.

And there may very well be extra strikes in retailer.
 
TSYS, the corporate that acquired Henry’s earlier fintech, Netspend, was itself acquired for $21.5 billion by Atlanta-based funds know-how firm International Funds Inc. in September 2019, considered one of a number of blockbuster consolidation offers amongst U.S. fee processors.

Final fall, rumors started circulating within the monetary press that International Funds was placing its Netspend unit in Austin up on the market.
 
In December, the Wall Road Journal reported {that a} $70 billion deal to mix International Funds and Jacksonville, Fla.-based funds know-how rival Constancy Nationwide Data Providers Inc. had collapsed.
 
“You possibly can’t transfer an organization’s headquarters simply due to (Henry). There’s positively bought to be different causes concerned in it, however they might have extra colour round that,” VerHage stated.

Needham & Co. analyst Mayank Tandon final fall added to hypothesis {that a} deal may very well be within the works.
 
“Regardless of the comparatively massive measurement of Netspend, we imagine that (Inexperienced Dot) is properly positioned to have the ability to efficiently purchase, combine and handle Netspend’s pay as you go card applications,” Tandon wrote. “The mixture of (Inexperienced Dot) and Netspend would carry collectively the 2 largest pay as you go card program managers within the U.S. market.”

Inexperienced Dot, International Funds and Constancy Nationwide all declined to touch upon merger hypothesis.

Laying the groundwork

The groundwork for Inexperienced Dot’s transfer from Pasadena was probably being laid earlier this 12 months.

On a Feb. 22 convention name with Wall Road analysts to debate fourth-quarter 2020 monetary outcomes, Inexperienced Dot’s interim chief monetary officer, Jess Unruh, stated the corporate’s work-from-anywhere company coverage prompted a call to shut most of its leased workplace area in the USA this 12 months.

Inexperienced Dot recorded an impairment cost in 2020 of $22 million in reference to the pandemic’s financial impression on leases and workplace gear leases. The corporate is required to proceed making contractual funds till its working leases are previously terminated or expired, Unruh stated.
 
Inexperienced Dot has already ended its lease for its 160,000-square-foot constructing in Pasadena.
 
Henry appears to have embraced the shift to distant work pressured by the coronavirus pandemic.

“I need the very best and brightest individuals we are able to discover to hitch our group to assist us achieve success, and you may reside anyplace you need,” Henry stated earlier this month in an interview with CNBC. “I’m not Jamie Dimon. I’m not going to pressure you to take the prepare three hours a day.”

Henry was referring to feedback made earlier in Might by JPMorgan Chase & Co. Chief Govt Dimon, who is asking his U.S. workers again to the workplace.

“What Covid did was pressure a thoughts shift. We see how productive we’re working from anyplace and the way a lot our workers like it,” Henry stated. “It’s extra essential to be productive than be busy. If you happen to pressure individuals to come back to an workplace each day, then all people’s going to attempt to be busy.”

For reprint and licensing requests for this text, CLICK HERE.