MoneyGram's Turnaround Artist
Thanks largely to the golden touch of CEO Pamela Patsley, the Dallas-based company is back in the chips.
“We had a great second quarter; we continued to grow throughout,” Patsley says. “We’re continuing to build the team and adding talent where we’ve needed to. We’re bringing the focus to what is the value creation of this business; long-term, [what’s important] isn’t what spread we make on the investment portfolio.”
Another bright spot was the closing in May of a second recapitalization, or what Patsley calls the “good recap”—a direct result of a boost in investor confidence. THL and Goldman Sachs converted their preferred shares into common stock, reducing dilution of the common
MoneyGram also closed on a new, $540 million senior-credit facility, which extends the company’s maturities and takes advantage of better interest rates, Patsley says.
The recapitalization “was a very positive event and the next step in our evolution to move forward from the events of ’08,” she says.
MoneyGram is comfortably nestled in the No. 2 spot among its money-transfer competitors. The better-known, 160-year-old Western Union is much larger, reporting $5.2 billion in revenue and moving $76 billion of cash annually, compared to MoneyGram’s $20 billion in transfers.
In early September MoneyGram’s stock was trading at about $2.50 per share, while Western Union’s was valued at around $16. Patsley acknowledges that Western Union is larger in the size and scope of its business lines, but says that her goal isn’t to be bigger than Western Union, just better.
“When we focus on the consumer, focus on our agents, and focus on our partners, we can create better value for our shareholder, [and] we are solidly No. 1,” she says. “We may be the second largest. That’s okay, but largest doesn’t mean the best.”
The market potential for growth is huge. According to the Center for Financial Services Innovation, an estimated 20 percent of U.S.
households, or 22.2 million, don’t have a bank account, and another 20 percent are considered under-banked. These are MoneyGram’s prime potential customers.
When it comes to money transfer, the method hasn’t changed much over the years. If someone in Dallas wants to send money to Los Angeles, he or she goes to a MoneyGram agent like Ace Express or Wal-Mart, and sends it. Within 10 minutes, the money arrives at its destination for pickup. The same transfers are occurring across the globe by emergency users, repeat customers sending money home or paying bills, and a growing migrant diaspora.
The lion’s share of MoneyGram’s business is cash-to-cash, but its online business is rapidly growing as well. Online options now include a cash to bank account, card (debit or credit) to account, cash to prepaid card, bank account to cash, and account to account. Enter the mobile phone, and the permutations are mind-boggling.
“We’re staying really focused on money transfer and making sure we’re well-organized and allocating capital and resources to get at the [mobile] opportunity,” Patsley says.
MoneyGram agents, or those that handle the money-transfer functions, are as diverse as the populations they serve. The company aligns with post offices around the world, including those in Canada, Jamaica, Kazakhstan, Kenya, Italy, Poland, Ukraine, Moldova, and the United Kingdom. Some agents are small, individual locations at ethnic groceries, newsstands, or convenience stores, while many others are large retailers such as Wal-Mart and CVS. Countries such as China and India require transfers to go through financial institutions.
When you’re in 192 countries, most rocks have been overturned for geographical growth, but there’s room for expansion in parts of Russia and Mexico, which is a long-standing regional corridor for MoneyGram.
A newer “send” market for MoneyGram is the Middle East, but the challenge is to ensure that the “receive” markets in Southeast Asia are strong as well. “You can’t just say now we’re doing this in Saudi,” Patsley says. “If you don’t have a great presence in India, Bangladesh, and the Philippines, you’re not going to get a lot of business out of Saudi on the send side.”
Patsley’s on the road a lot, with her iPad, iPhone and BlackBerry in hand. (She likes both smartphones for their different features.) Her passion for travel is infused in the MoneyGram culture. She encourages employees to learn how others live around the world and has geographically expanded agent conferences. The Middle East conference, for example, is now a Southeast Asia conference, and agent conferences also have been established in Malaysia and Cape Town, South Africa.
“You can’t run a global company and never get out,” she says. “Even for our own employees, let alone prospects and customers. That’s been a culture evolution here at MoneyGram. It feels more like one company, not, ‘I’m in Rome, so this is my patch, and you’re in … .’ Everybody is working together really well and more seamlessly as a global company.”
Patsley also travels extensively with her family and likes to hike and enjoy the great outdoors. Maybe someday, if she ever retires, she’ll become a vocal advocate for her other great passion: biking. Even though our interview is running long, she gets fired up talking about the rides she and Gary take on the weekends into Oak Cliff’s Kessler Park, the Katy Trail, and the Santa Fe Trail, which connects to White Rock Lake, and the need for more paths in Dallas.
“Minneapolis has more than 300 miles of bike paths,” she says. “In Dallas you can bike year-round. Dallas is doing some great things to bring back the energy here. The Arts District, medical community, universities, and education—we’ve got it. I would love for Dallas to embrace biking more fully.”
Looking back on a career that spans nearly three decades, Patsley says her time working with John Tolleson, the founder of First USA, left an indelible mark on her leadership style.
“Working for John for so many years and going through the economic troubles with Texas in the mid-‘80s, we used that for a backdrop for tremendous value creation,” she says. “His leadership and business ethics were great examples. I draw a lot on that experience. Too may people who have senior roles in public companies [don’t focus on this]. The goal is value creation for shareholders; there’s not any other kind of metric.”
Tolleson, now CEO of Dallas-based Tolleson Wealth Management, says Patsley was his right hand during several major First USA transactions, and that her big-picture perspective was invaluable. When the Paymentech subsidiary was struggling, Tolleson remembers asking her to quit making suggestions and just run it.
“She did an incredible job taking over that operation,” he says. “She’s very detail-oriented and gets into the nitty-gritty and understands every aspect that the business requires.”
Those who work with Patsley say she’s a voracious reader, remembers everything, holds employees accountable—but not in a micromanaging way—and expects ethical behavior from everyone. She also asks a million and one questions and doesn’t shy away from the task at hand.
“MoneyGram is an amazing brand,” Patsley says. “I feel very honored to have the opportunity to lead it. Stay tuned and stay close, and watch us. I think we’ll deliver some really good things.”
As if she hasn’t already.