Visa prepares for near-$19B IPO: Great Timing with Credit Crunch
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In what has to be a case of the worst timing award, Visa is planning to launch an $18.76 billion IPO. When credit gets tight, go IPO:
NEW YORK (AP) — Visa Inc. said Monday its initial public offering could raise up to $19 billion – making it the largest in U.S. history – even though the credit card processor is entering the market at a difficult time.
The San Francisco-based credit card processor expects to see high demand for its stock, despite the housing-led credit squeeze that is threatening consumers’ spending and their ability to keep up with debt payments.
But Visa, like its public rival MasterCard Inc., is a card processor, not a lender, and has a strong presence in other countries where many people are just starting to use plastic instead of cash. And Visa is the largest U.S. card company by market share – its transactions, in number and dollar amount, in 2006 outpaced those at MasterCard and American Express Co.
Visa said in a Securities and Exchange Commission filing it will offer 406 million shares at $37 to $42 per share. There will be an option for underwriters to buy an extra 40.6 million shares to cover any excess demand.
Mastercard had a very successful IPO but currently is trending lower. The appetite for credit is diminishing and it will be interesting times for the IPO. If anything, Visa owns a large percentage of the US marketshare and this stock alone, should be an excellent litmus test for global consumer demand.