Visa proposes what would be richest U.S. IPO

[zoog]

Curious timing for an IPO, what with this little minor credit crunch and recession we seem to be having...

Is this smart-money owners looking for millions of suckers, or is the risk only with the issuing banks (such as Citibank), while Visa itself remains secure? Seems like in a recession, with people cutting back on spending, that would reduce credit-card transactions and therefore reduce Visa's cut on transactions. Also seems like new credit is hard to come by and people have already maxed out their credit cards, so I don't see an increase or even maintenance of previous transactions levels.

NEW YORK (MarketWatch) -- Visa Inc. has set its sights on generating the largest proceeds ever raised in a U.S. initial public offering, proposing Monday a whopping $18.8 billion deal that will likely begin trading on the New York Stock Exchange within the next several weeks.

The San Francisco card giant plans to offer 446.6 million Class A common shares, including 40.6 million shares for underwriters in a traditional "green shoe" portion of the deal.

At the top of the proposed pricing range of $37 to $42 a share, Visa's IPO would raise some $18.76 billion, easily eclipsing the $10.6 billion raised by AT&T Wireless in 2000 in what is currently the richest-ever U.S. IPO.

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[Guest]

Re: Visa proposes what would be richest U.S. IPO

I guess if you knew your business would be worth much less in a year or two, you'd want to sell off much of it at today's price, too.

Other businesses have done very well finding suckers to buy in just before the bad news starts rolling in.

And once they cash out and pass much of the risk(consequences) onto stockholders, it may allow them to do some even riskier things to try to compensate for the hard times ahead, with a "what the heck, I'm rich anyway" attitude if it doesn't pan out and things crash. What that may be in this business, I don't know.

[Mega]

Re: Visa proposes what would be richest U.S. IPO

Can't see it as a GOOD investment at this time!
Mike

[zoog]

Re: Visa proposes what would be richest U.S. IPO

Marketwatch article on this.

It's all there in the prospectus: how banks won the lucrative assignment of underwriting the IPO; why, after all these years, Visa is going public; why banks need the money; and who is going to pay for it.


The banks behind Visa Inc. aren't exactly taking a cash advance, but they are cashing out. And according to future growth projections, they probably won't be paying investors back at the exorbitant rates offered by credit-card companies to the rest of us.

Visa is owned by 13,000 banks, and that makes this IPO about fees, paydays and -- considering the state of the banking business -- desperation.

If Visa is such a great investment, why are the owners selling? In this case, a cash infusion from selling a stake will help the banks shore up their balance sheets without going hat-in-hand to sovereign funds in the Middle East and Asia.


Visa, which has been the industry's private domain since the early 1970s, has been a rainy-day fund for banks.

The sellers are also looking to dump Visa at a time when its growth is slowing. Payment volume was $1.45 trillion in 2007, but it grew at only a 9.6% rate during the year compared to 17%, 18% and 17% the previous three years respectively.