Wednesday March 19, 03:28 PM
Visa's shares soar on market debut
NEW YORK (AFP) - Visa, which operates the world's biggest credit card network, saw its newly minted shares soar in value Wednesday amid the largest share offering in US market history.
Visa Inc. raised 17.9 billion dollars from its initial public offering (IPO) of 406 million shares after a group of investment banks priced its stock at 44 dollars.
Frenzied bidding for Visa's shares on the New York Stock Exchange saw its shares spike to 55.65 dollars in late morning trading as investors snapped up its shares, marking a 25 percent gain on the offer price.
Shares in the San Francisco-based firm, which processes credit card payments and fees around the globe, started trading under the ticker symbol "V."
Visa launched its blockbuster IPO as major Wall Street banks and brokerages weather one of the worst financial market downturns in decades.
Some of the banks backing Visa's IPO have suffered vast losses tied to mortgage-backed securities which have sparked a broadening credit crunch and brought the Bear Stearns (NYSE: BSC - news) investment bank to its knees last week.
Analysts say, however, that Visa is relatively protected from the financial and credit turmoil because, unlike banks and credit card firms, it does not offer credit to cardholders.
Visa's giant IPO easily smashed the US record of 10.6 billion dollars set by AT&T Wireless in 2000.
The record for the world's largest share debut is held by The Industrial and Commercial Bank of China which debuted with a 21.9-billion-dollar IPO on Shanghai and Hong Kong markets in October 2006.
The value of Visa's IPO could be boosted though as underwriters of the share offering have a 30-day option to purchase up to 40.6 million additional shares, which would enable Visa to reap an additional 1.7 billion dollars.
The credit card network operator is owned by a consortium of banks which are likely to welcome a handsome return from selling Visa's shares. The company's IPO had been in the works since October 2006 when it spun off Visa Europe as a separate entity.
The IPO was underwritten by a host of well-known banks including JP Morgan Securities, Goldman Sachs (NYSE: GS - news) , Banc of America Securities, Citibank, HSBC Securities (USA), Merrill Lynch (NYSE: MER - news) , UBS Investment Bank and Wachovia Securities.
Visa's public debut sees it join its rival MasterCard (NYSE: MA - news) which went public two years ago.
The US IPO market has virtually dried up in recent months amid the credit squeeze and wider economic uncertainty. A growing number of economists believe the world's largest economy has already fallen into a recession.
Private equity firm Blackstone Group raised 4.13 billion dollars last June in what was the biggest share offering on Wall Street in five years. It (Frankfurt: A0MLX5 - news) shares have plummeted since that date, however.
In November, MSCI, a unit of investment bank Morgan Stanley (SPU - news) , raised 250 million dollars in an IPO.
And 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 have slumped over 80 percent since the IPO.
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