Visa plans $17B IPO that would be nation’s largest

PBN Staff

02/25/2008

SAN FRANCISCO – Visa Inc. hopes its upcoming public offering will raise $17 billion, making it the nation’s largest IPO, according to a regulatory filing posted today by the international credit-card network. AT&T Wireless Group has held the title of largest U.S. IPO since 2000, when its initial offering attracted $10.6 billion, Bloomberg News said.
Visa plans to sell 406 million Class A shares, at a price of $37 to $42 per share. Banks would have the option of selling as many as 40.6 additional shares, potentially pushing the IPO to $18.8 billion – and No. 2 worldwide, behind the $22 billion raised in 2006 by Industrial & Commercial Bank of China Ltd. The offering would leave Visa with a market value of more than $32 billion – roughly comparable to credit-card rival MasterCard’s $26 billion current value, Paul Bard, an analyst at Renaissance Capital in Greenwich, Conn., told Bloomberg News.
Visa’s pricing looks “very similar to where MasterCard is [trading],” at about 27 times 2008 earnings, Bard said. And “people might argue that it’s growing faster than MasterCard in transactions.” The rival card company has seen its shares rise to more than five times their initial value since its offering not quite two years ago, “a sore point for many IPO investors who missed it,” added David Menlow, who tracks the market as president of Millburn, N.J.-based IPOFinancial.com. That “MasterCard factor” may help Visa succeed despite the weak market for IPOs in general, he said.
Of the proceeds, Visa said $3 billion will go toward settlements of lawsuits, including its November agreement with American Express; $10.2 billion will be used to buy Class B and Class C shares now held by Visa members including JPMorgan Chase & Co., Bank of America Corp. and Visa Europe. The IPO’s date was not disclosed. The sale is being arranged by 15 banks, led by JPMorgan and Goldman Sachs Group Inc.; after the offering, Visa shares will be listed on the New York Stock Exchange under the symbol V.

Visa Inc. operates the world’s largest credit card and electronic payments network, under the Visa, Visa Electron, Interlink and PLUS brands. To learn more, visit www.visa.com.

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