Wednesday March 19, 05:54 AM
Visa raises 17.9 billion dollars in historic IPO
NEW YORK (AFP) - Credit card giant Visa raised more than 17 billion dollars Tuesday in the largest share offering in US history, despite a growing financial crisis in the country.
Visa Inc. sold 406,000,000 shares priced at 44 dollars each, raising nearly 17.9 billion dollars before it begins trading on the New York Stock Exchange on Wednesday under the ticker symbol "V," the San Francisco-based company said.
"Visa expects net proceeds from the offering, after deducting underwriting discounts and commissions and estimated offering expenses, to be approximately 17.3 billion dollars," the company said in a statement.
The price was higher than the expected 38 to 42 dollars a share, a sign of the strong demand for Visa's stock.
Visa's IPO easily broke the US record of 10.6 billion dollars set by AT&T Wireless in 2000.
But it is well short of the world's largest IPO, a 21.9-billion-dollar offering by Chinese bank ICBC, The Industrial and Commercial Bank of China, on Shanghai and Hong Kong markets in October 2006.
Underwriters of Visa's IPO have a 30-day option to purchase up to 40,600,000 additional shares, which would bring Visa an additional 1.7 billion dollars.
Visa, which is owned by a consortium of banks, has planned the offering since October 2006 when it spun off Visa Europe as a separate entity.
The IPO, led by JP Morgan Securities, counts Goldman Sachs (NYSE: GS - news) , Banc of America Securities, Citibank, HSBC Securities (USA), Merrill Lynch (NYSE: MER - news) , UBS Investment Bank and Wachovia Securities as joint bookrunners.
Visa, which touts itself as the world's largest electronic payment and credit card company, joins its rival MasterCard (NYSE: MA - news) , which went public two years earlier.
But Visa's IPO appears headed into a financial market storm with investors battening down the hatches amid worries of a credit crunch that could hurt many firms, especially in the financial sector.
At the same time, a softening US economy could hurt Visa and other credit card firms, which rely on consumer spending to drive profits. With a housing crisis deepening, many consumers are having trouble paying their bills, including credit card debt.
The move comes at a time when IPOs are few and far between, especially in the financial sector.
Last June, private equity firm Blackstone Group raised 4.13 billion dollars in what was the biggest share offering on Wall Street in five years.
In November, MSCI, a unit of investment bank Morgan Stanley (SPU - news) , raised 250 million dollars in an IPO. The financial analytics firm that provides data on indexes and risk for portfolio managers has managed to buck the trend and has risen 49 percent.
Virgin Mobile, a joint venture of Sprint Nextel (NYSE: S - news) and the Virgin Group of Britain, raised 375 million dollars last October but its shares are down more than 80 percent since the IPO.
"With concerns surrounding the slowdown in the economy, weakness in the financial sector, the skyrocketing price of oil, and the plummeting dollar, it's not surprising to find that the initial public offering market has pretty much dried up," said Jocelynn Drake, analyst at Schaeffer's Investment Research.
"Who would want to issue their shares in this market? Only a behemoth such as Visa."
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