GO­ING PUB­LIC

Pre­paid debit card com­pany NetSpend lat­est Austin com­pany with IPO bid

Austin American-Statesman - - METRO & STATE - By Lori Hawkins

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.

Dan Henry

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