Shares of prepaid debit card provider Green Dot soar after expanded IPO prices high

Green Dot shares soar after IPO prices high

NEW YORK — Green Dot Corp. shares soared more than 20 percent Thursday after the prepaid debit card provider raised more than it expected in its initial public offering.

Green Dot raised $164.1 million by selling 4.6 million shares for $36 apiece. Earlier this month, Green Dot said it planned to raise about $129 million.

Analysts had expected strong demand for shares of Green Dot, especially after two technology companies posted double-digit first day gains in their IPOs last week. A cleantech company, Ameresco Inc., also rose nearly 6 percent Thursday, but it priced shares far below expectations.

Nearly half of the companies going public this year have priced low because shaky stock markets have left investors with little appetite for risk.

Green Dot’s cards became increasingly popular during the recession as banks tightened lending standards. The Monrovia, Calif., company expects more growth as technology improves and it waives fees to encourage consumers to use the cards, rather than cash.

The reloadable cards can be used for online shopping, bill payment, store purchases and ATM withdrawals. They don’t create credit risk, because consumers put their own cash on them, but they have the convenience of using a card.

The company recently extended an exclusive deal with Wal-Mart Stores Inc. to sell its cards in the discount retail giant’s stores until 2015.

Wal-Mart owns 2.2 million shares of Green Dot, none of which it sold in the IPO.

The company may also have appealed to investors because it said new restrictions on debit card fees in recently passed legislation don’t apply to its business. Other card issuers predict big revenue losses — Bank of America Corp., for example, says it could lose up to $2.3 billion in yearly revenue because of the new rules.

Green Dot was a less risky investment than many IPOs because it has no long-term debt. Its net income, excluding dividend payments and preferred stock, soared more than sevenfold in the two years through July 2009, despite the recession and a severe pullback in consumer spending.

On the New York Stock Exchange, Green Dot shares rose $8.43, or 23 percent, to $44.43 in afternoon trading. Ameresco added 57 cents, or 5.7 percent, to $10.57.