Visa Set To Go Public: Largest in History?
It has been awhile since we have heard anything about the Visa IPO. In the Wall Street Journal this morning, there was an article about credit-card processing giant Visa. Visa plans to sell as much as $17 billion in stock, which would make it the biggest IPO in U.S. history.
The industry leader proposed to sell 406 million shares between $37 and $42 each. At the proposed price range, the Visa offering would easily trump AT&T Wireless Group's $10.62 billion IPO in 2000. The IPO's underwriters will have the option of buying an additional 40.6 million shares.
"Based on the size of our network, the strength of the Visa brand and the breadth and depth of our products and services, we believe we are the leading electronic payments company in the world," the company said in its prospectus filing with the Securities and Exchange Commission.
In 2006, Visa recorded 44 billion transactions, compared with 23.4 billion for MasterCard Inc., its largest competitor. The offering represents just more than half of Visa's 808 million shares outstanding. Visa has said the rest will be held by the San Francisco firm's member banks.
Visa made its initial IPO filing in June with the SEC, beginning on the path from private, member-owned association for financial institutions to publicly held firm followed by smaller rival MasterCard.
MasterCard has been a high-flyer since going public in 2006, with its shares quintupling since then. Both firms aren't as tethered to consumer spending as credit-card issuers like banks because as an electronic-transaction processor it still makes money as more purchases are made with plastic instead of cash or checks.
Visa involves the mergers of Visa Canada, Visa USA and Visa International. Visa Europe will remain a bank-owned membership association and licensee of Visa Inc. The company said it plans to trade on the New York Stock Exchange under the symbol "V." The company hasn't said when it plans to make the offering, but today's release implies it could come soon.
At the midpoint of the proposed range, Visa sees raising nearly $15.6 billion, or $17.1 billion if the underwriters exercise their option to purchase all additional shares made available. The company said $3 billion of the proceeds would be put into an escrow account to pay legal settlement, with another $10.3 billion used to redeem stock held by its member banks. The rest would be for general corporate purposes.
This could be the best offering in 2008!
--Source, Wall Street Journal
