Seeking $100 million in an initial public offering, the point-of-sale fintech provider GreenSky wants to expand beyond arranging financing for home improvement projects and into other niches, including helping customers arrange to pay for car repairs and even luxury items.

Facilitating health care lending is central to its growth plans, but regulatory uncertainty at the state and federal levels poses a threat to those plans, GreenSky said in its recent IPO filing.

GreenSky’s increased focus on elective health care customers — it already provides a platform for banks to lend for cosmetic, dental and vision procedures — coincides with rising health care costs and an aging American population, said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research. Health care companies are investing in the aging baby-boomer population as the share of federal health care spending attributed to aging rises to 40%.

“Here’s an opportunity in health care, which is in my mind one of the most messed up industries known to man,” Schwanhausser said.

GreenSky expects elective health care lending to be more steady quarter to quarter than its main business of facilitating home improvement lending, which makes up the majority of the company’s current business. Home Depot is its most significant single merchant partners, representing around 6% of GreenSky's total revenue in 2017.

The Atlanta firm is going public at a time when point-of-sale lending is gaining in popularity. Personal loans issued by banks hit a record $807 billion at Sept. 30, according to data from the Federal Deposit Insurance Corp.

Chart tracking net income for GreenSky from 2015 to 2017


Goldman Sachs, JPMorgan Chase and Morgan Stanley will be lead underwriters of the IPO. GreenSky’s last outside capital raise was $50 million from Fifth Third Bancorp, an investment that translated into a $3.6 billion valuation of the firm.

Fifth Third, Regions Financial and Synovus Financial have all seen gains in their point-of-sale loan portfolios since partnering with the fintech.

With 16,000 merchant partnerships as of late last year, GreenSky’s total revenue was $325.9 million in 2017, $263.9 million in 2016 and $173.5 million in 2015. Its net income was $138.7 million in 2017, $124.5 million in 2016 and $93.8 million in 2015.

“We are delighted about the possibility of a GreenSky IPO," said Nigel Morris, a former president of Capital One Financial and managing partner of QED Investors, which in 2014 became the first institutional investor in GreenSky.

“GreenSky is one of those truly magical win-win-win companies," Morris wrote in an email. "Merchants, consumers, and banks all terrifically benefit from this unique platform.”

GreenSky is also looking into other big-ticket categories to facilitate lending in: online retail, power sports, auto repair and jewelry.

A risk, analysts note, is that in recent years federal and state regulators have imposed new rules on the financial services industry and have become more aggressive in enforcement of current rules.

The firm reported in its IPO filing that regulators have recently increased scrutiny of third-party financiers of medical procedures; the Consumer Financial Protection Bureau and the New York and Minnesota attorneys general have recently conducted investigations of alleged abusive lending practices or exploitation by those financiers.

In its filing, GreenSky noted that it had been named as a defendant in various legal actions, including claims of discrimination, credit reporting and collection practices. The company did not specify what those legal actions were.

“We have in the past chosen to settle … certain matters in order to avoid the time and expense of contesting them,” the company wrote. “[N]one of the settlements has been material to our business.”

GreenSky is a risky investment, said David O’Connell, a senior analyst with Aite Group’s wholesale-banking team, because borrowers of the loans its wants to facilitate may not realize what they are getting into and the credits might be more prone to delinquencies if the economy worsens.

“You can repossess a car, and a business would generate income," O’Connell said. "But with these loans there's no collateral, no cash flow here, and it's the last debt to go on board in a cycle. I have a hard time getting excited about this. … I can't picture this being rosy in an economic downturn with rising interest rates.”