Sacramento-based One Finance Inc.’s brand will be the surviving entity in a multiple fintech merger involving an investment vehicle funded by retail giant Walmart Inc. and Palo Alto venture capital firm Ribbit Capital.
The independent investment vehicle, called Hazel, is proposing to buy Even Responsible Finance Inc., an Oakland fintech, and digital banking app One Finance, and then merge them together under the name One.
“We now have new strategic investors,” One CEO Brian Hamilton told the Business Journal.
Hazel will buy out the previous investors in the companies and own the combined entity, which going forward will be One.
After the conclusion of the deal, the One app will be integrated into Walmart’s (NYSE: WMT) physical and digital channels, offering services to its 1.6 million U.S. employees and 100 million-plus weekly shoppers, Hazel said in a news release.
The companies did not disclose the value of the transaction.
Omer Ismail, a former Goldman Sachs Group Inc. (NYSE: GS) executive, will be the CEO of the combined business at the close of the transaction, estimated to occur in the first half this year.
David Baga, CEO of Even, and One co-founder and CEO Hamilton will remain in key leadership positions, Hazel said.
“There will be no layoffs. They want us to grow,” Hamilton said.
The combined company will have more than 200 employees, and it will be capitalized with more than $250 million in cash, according to Hazel.
One’s focus is filling financial services needs of middle-class American families on a digital platform without charging a lot of fees. The company has built innovative products, such as “pockets,” that allow users to automatically save money that earns interest in a separate pocket, borrow money and access a credit line and overdraft protection that is free if paid down every month. The account is accessed online, and comes with a single card that can be used for debit or credit for purchases. It also has pockets that can pay friends or share payments, which are not functions available on traditional banking platforms.
Even is a fintech that allows employers to offer workers their paychecks early, up to 50% of their earned wages, to avoid bank charges and payday loans. Walmart is an existing Even customer. Even has 2 million members.
Since its launch in 2019, One has raised $66 million. Its most recent round of funding, $40 million in August last year, was led by Progressive Investment Co. Inc., the corporate investment arm of Mayfield Village, Ohio-based The Progressive Corp. (NYSE: PGR), which is best known for its Progressive Insurance lines of business. Other investors in One include Foundation Capital, Core Innovation Capital and Obvious Ventures. They are all getting bought out in this transaction, Hamilton said.
Prior to starting One, Hamilton was the former CEO of digital bank Azlo and a former Capital One Financial Corp. (NYSE: COF) executive. One's other co-founder is former Intuit and PayPal CEO Bill Harris.
One’s banking services are provided by Coastal Community Bank, a subsidiary of Coastal Financial Corp. (Nasdaq: CCP) in Everett, Washington. Through that relationship, One savings accounts are insured by the Federal Deposit Insurance Corp.
Walmart has tried and failed to get a bank charter. The deal involving One could allow it to offer financial services at arm's length.
