NetSpend shares rise sharply in market debut

AP News
Posted: Oct 19, 2010 2:51 PM
NetSpend shares rise sharply in market debut

Shares of NetSpend Holdings Inc. climbed Tuesday in their market debut despite uncertainty in the week leading up to its initial public offering.

The stock of the Austin, Texas, company gained $2.05, or nearly 19 percent, to $13.05 in afternoon trading. NetSpend, which offers prepaid debit cards, priced 18.5 million common shares at $11 apiece late Monday

NetSpend's shares were set to trade last week, but news that its preferred debit card ran into regulatory trouble upended those plans.

In a filing with the Securities and Exchange Commission, NetSpend said that one of its issuing banks, MetaBank, was ordered by the government to shut down its iAdvance program, a line of credit that NetSpend offers. The government claimed the bank engaged in unfair and deceptive practices and must receive approval for any new agreements with other credit product users.

On Monday, NetSpend said in a regulatory filing that troubles at MetaBank could cost the company $1 million in annualized revenue. It also said it's moving 15 percent of its prepaid debit cards to other issuing banks within the next three months to diversify its operations.

MetaBank issues 71 percent of NetSpend's active prepaid cards. NetSpend owns a 5-percent stake in the bank's holding company, Meta Financial Group Inc.

NetSpend plans to use proceeds from the offering to repay debt and for general corporate purposes, including working capital, joint ventures and acquisitions.

The stock trades on the NASDAQ Stock Market under the symbol "NTSP."