Prepaid debit card company NetSpend latest Austin company with IPO bid
Austin-based NetSpend Holdings Inc., one of the largest national providers of prepaid debit cards, is hoping to raise $200 million in an initial public offering of its stock, according to a securities filing Thursday.
Founded in 1999, NetSpend provides financial services to people who do not have traditional bank accounts but need an alternative to cash and money orders to pay bills and make purchases. An estimated 60 million Americans fall into that category.
NetSpend had 2.1 million active cards as of March 31, according to the company’s Securities and Exchange Commission filing.
NetSpend had revenue last year of $225 million and a profit of $17.9 million, according to the filing. In this year’s first quarter, revenue grew 27 percent from the same quarter last year, to $69.5 million. NetSpend’s profit increased 29 percent, to $4.4 million, over the same period.
On Thursday, CEO Dan Henry announced that the company had hired a new president, Chuck Harris. Harris previously was an executive at financial services company Intuit Inc.
NetSpend has 480 employees, most of them in Austin. The company is one of three in Austin that have filed to sell stock to the public. Rules-Based Medicine Inc., a biotech firm, and chip designer Wintegra submitted their filings months ago but have not set IPO dates.
The U.S. IPO market has been volatile, spurring many companies to cut their prices or delay their offerings. Still, the market is stronger than it was last year.
Between April and June, 39 companies raised a total of $5 billion in initial stock offerings, according to a report by PricewaterhouseCoopers. By comparison, just $1.6 billion was raised by 12 IPOs during the same period last year.
One Austin company has made it out of the IPO gate this year: In April, software maker Convio Inc. raised $46.2 million with a sale of 5.1 million shares.
NetSpend was founded by brothers Roy and Bertrand Sosa to offer prepaid debit cards to
Continued from B consumers who don’t have traditional credit. The So‑ sas are no longer with Net‑ Spend and have founded an‑ other prepaid company, Rêv Worldwide.
NetSpend’s prepaid debit cards carry a MasterCard or Visa logo and are issued by a bank. The company makes money from fees that users pay when activating and making transactions with the cards.
NetSpend sells the cards on its website and in more than 43,000 locations, includ‑ ing convenience and grocery stores, such as H‑E‑B, and check‑cashing stores includ‑ ing ACE Cash Express.
In 2007, NetSpend agreed to be acquired by Capital One Financial Corp. for $700 million, but the deal fell through because of antitrust concerns.
NetSpend’s IPO filing comes just one week before its chief competitor, Green Dot Corp., based in Monro‑ via, Calif., is scheduled to proceed with its own IPO, which could raise as much as $129 million, according to a regulatory filing.
NetSpend said it intends to use a portion of the proceeds to repay debt and will use re‑ maining proceeds for general corporate purposes.
Major shareholders are Oak Investment Partners, with a 47 percent stake; JLL Partners, 33 percent, and Millennium Finance Co., 6 percent.
The proposed stock issue would be made through in‑ vestment companies includ‑ ing Goldman Sachs Group Inc.; Bank of America Corp., Merrill Lynch & Co. Inc.; Wil‑ liam Blair & Co.; and Wells Fargo Securities.