Goldman Sachs will run an initial public offering for shares of NetSpend this week. With the exception of two million shares already held by investors that will be put into the IPO, it will bring lots of new equity to the company.
This has been a coming-out summer for alternative financial services companies. NetSpend filed an S-1, the form used by potential IPO registrants to demonstrate their value to shareholders, on July 15th. Green Dot had an IPO earlier in the year. Buy Here-Pay-Here used care retailer Drive-Time had said that they would offer shares. Although DT did subsequently withdraw their IPO, the underlying fact remains: in a stagnant IPO marketplace, investors are making an exception with companies in the "shadow banking" system. NetSpend differs from other prepaid card companies (Green Dot, Blackhawk, Rush Card) in that it comes closes to providing a vertical set of services. NetSpend has to partner with a bank, but short of that, it does just about everything else.
I like to evaluate a prepaid card company by how it makes its money. There are plenty of ways to pick