Visa plans $10bn IPO

According to the documents, the proposed maximum offering has been estimated at $10 billion, making it one of the largest IPOs.However, Visa did not disclose the number of shares or the dollar amount of the individual share offering, which is a preliminary figure used to calculate the companys registration fee the eventual amount raised in the IPO could be higher

Visa is moving ahead with its
plans for an initial public offering (IPO) after filing
registration documents with the US Securities and Exchange
Commission (SEC) on 9 November. According to the documents, the
proposed maximum offering has been estimated at $10 billion, making
it one of the largest IPOs.

However, Visa did not disclose the number of shares or the dollar
amount of the individual share offering, which is a preliminary
figure used to calculate the company’s registration fee – the
eventual amount raised in the IPO could be higher. Neither did it
disclose when it plans to go public, although in October 2006 Visa
gave an estimated timeline of between 12 to 18 months from that
date.

The new publicly traded entity, Visa Inc, will combine Visa’s US,
international and Canadian operations. Visa Europe will remain a
membership organisation and take a minority stake in Visa
Inc.

News of the IPO filing came a week after Visa settled an anti-trust
dispute with American Express under which Visa must pay $2.25
billion to Amex. Visa has said it plans to use IPO proceeds to fund
its expansion globally, and also said that some of the proceeds
from the IPO will be held in an account to settle lawsuits filed.
Visa and MasterCard face several anti-trust lawsuits from rivals
such as Discover, and from retailers, several of which have accused
the networks of price-fixing.

Visa’s IPO is likely to attract as much, if not more, interest as
that of MasterCard in May 2006. Since MasterCard went public, its
shares have risen in value by 400 percent. According to the filing,
Visa had revenue of $3.73 billion for the nine months ended 30 June
2007, compared with $3.91 billion for fiscal year 2006. Visa said
that its total payments volume for 2006 amounted to $3.2 trillion,
compared to MasterCard’s $1.9 trillion and American Express’s $562
billion.

Given that Visa is much the larger of the two networks, its shares
are likely to prove extremely popular with investors, who are
nervous about investing in banking shares amid the subprime fallout
and ensuing credit crunch, which have badly dented profits at some
major US financial institutions.

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Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, told
CI: “With Visa’s impending IPO, MasterCard shares may see some
pressure as investors consider cycling some of their profits on
MasterCard into the new public company. Additionally, we believe
that Discover Financial Services could potentially be an M&A
target by a large bankcard issuer at some point in the future. If
that scenario were to occur, we believe Visa and MasterCard would
be negatively impacted.”