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Netspend founders are back with a plan to “grow the company and make it the leader in the industry that it should’ve been”

Courtesy of Netspend

Roy and Bertrand Sosa are planning another IPO for Netspend, the groundbreaking fintech they founded nearly 25 years ago. The Sosas attended the Money 20/20 conference in Las Vegas in late October and spoke to Fortune on the sidelines of the fintech event.

Last year, the Sosa brothers partnered with Searchlight Capital Partners, a private equity firm, to buy back the Netspend consumer business from Global Payments. The all-cash deal was valued at $1 billion. The brothers, who did the acquisition through their latest company, Rêv Worldwide, closed the Netspend acquisition in May.

The Sosas are happy to have regained control of Netspend. “We’re looking to do this for the next 25 years. We have no plans to exit,” said Roy Sosa who is chairman and CEO of Ouro. Ouro is the parent of Netspend and Rêv Worldwide.

In 1999, the Sosa brothers, both Mexican immigrants, launched Netspend from their one-bedroom apartment in Austin, Texas with just $750. Netspend offered reloadable prepaid debit cards for the “underbanked” market, which refers to U.S. consumers who don’t have a checking, savings or money market account. Netspend's prepaid cards allow people without banking relationships to enjoy the benefits of plastic, the executives said. “We were fintech before there were fintechs,” said Bertrand, who is president and chief brand officer of Ouro.

In 2010, Netspend went public raising $203.5 million. The Sosa brothers owned small stakes in the company at that time and cashed out after the IPO. Three years later, payment processor Total System Services, or TSYS, acquired Netspend for about $1.4 billion in 2013.

Netspend got caught up in the wave of consolidation that hit large payments providers. In 2019, Fiserv bought First Data for $22 billion, while Fidelity National Information Services, or FIS, scooped up WorldPay in a $35 billion deal, and Global Payments bought TSYS for $21.5 billion.

The big deals have generated divestitures. FIS in July agreed to sell a majority stake in WorldPay to GTCR, a Chicago buyout shop, in a deal valued at $18.5 billion. In 2022, Global Payments, which focuses on B2B clients, put the consumer side of Netspend up for sale. "Global Payments is an amazing company. Not only did they sell the company back to the founders, but they kept us as partner,” said Roy.

Netspend currently employs 650 people. The company has been profitable since 2001 and currently has “millions of customers,” the brothers said. (They would not disclose an exact number.)

The typical Netspend client makes $100,000 or less, and lives paycheck to paycheck, said Roy Sosa. There are many single mothers, he said. “These are everyday Americans whose dollar is stretched.”

Netspend’s technology enables other companies, including PayPal, Western Union and Dollar General, to launch prepaid debit cards.

Over the last decade, Netspend has generated over $2 billion of profit and paid federal taxes in excess of $600 million, Bertrand said. It currently offers prepaid debit cards and debit cards both with high yield savings. The company is looking to expand into credit and insurance next year, he said.

The Sosa brothers plan to grow Netspend’s revenue by 20% to 30% year-over-year until they take the company public again, likely in the next four to five years, Roy said. “There are no plans to exit. The plan is to grow the company and make it the leader in the industry that it should’ve been,” Roy said.

See you tomorrow,

Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

This story was originally featured on Fortune.com

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