Visa USA To Offer IPO In The Face of Troubled Market
SAN FRANCISCO -- More details have come to light about Visa USA's planned initial public offering of stock that the card brand said is still planned even though market conditions would appear to discourage it.
According to a Visa announcement on Feb. 25, the new stock offering will carry the symbol 'V' and will take place on Mar. 20 of this year.
Should everything go according to plan, which skeptics point out almost never happens, the card brand will raise a record $19 billion from the initial offering, some of which will wind up in the hands of retailers seeking settlements of legal cases but some will end up in the pockets of financial institution issuers, including credit unions.
According to documents Visa filed with the Security and Exchange Commission, Visa said it will offer roughly 406 million shares at between $37 and $42 each with room to offer more shares if the demand seems to require it.
Analysts have said that the card IPO may have the strength to break with the recent down trend which has characterized the most recent market for initial offerings. Media sources have reported, for example, that so far this year there has only been $603 million raised in IPOs listed on the NASDAQ stock exchange this year.
Analysts have expressed optimism about the offering in the press, pointing out that Visa and MasterCard do not lend money directly to cardholders, as other card brands do, and instead make their money off the growing stream of electronic payments.
The history is replete with conflicting examples. MasterCard made its initial public offering of stock in 2006 at $46 per share and the stock has bucked the overall market trend and climbed to trade above $200.
But compare that with Discover Financial, which spun off from Morgan Stanley in an initial offering in June 2007 at $28 per share and has steadily sunk 48% as of press time. Another financial service IPO from last year, that of CIT, is trading essentially flat at $22 per share.
Credit unions and other card issuers have a direct interest in the Visa numbers because, according to the terms of the IPO, they stand to benefit once the offering is made and shares are credited to pay off legal claims from retailers and other card brands.