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VISA shed light on its IPO plans in a Securities and Exchange Commission [SEC] filing Monday. The highly-anticipated offering follows the successful Mastercard (MA) IPO of May 2006. Since that time, shares of Mastercard are up from roughly $40.00 to $200.00, or almost 400 percent! In addition, if successful, VISA’s offering could be the largest in US history. 

San Francisco-based credit card giant VISA plans to sell 406 million class A shares between $37 and $42 a share, according to the SEC filing. The company might also sell another 40.6 million shares in the event of strong demand. All told, the world’s largest credit card network could raise more than $18 billion. Shares will be listed on the New York Stock Exchange [NYSE] under the ticker symbol “V” and, according to MarketWatch, could begin trading “within the next several weeks.”  

If successful, the IPO would be the largest in US history. AT&T Wireless holds the record with its $10.6 billion offering eight years ago. Kraft Foods (KFT) raised $8.7 billion in 2001, UPS (UPS) had a successful $5.5 billion offering in 1999, and CIT (CIT) raised $4.6 billion in capital six years ago.

The timing of the VISA IPO might be somewhat risky, however, given the ongoing turmoil in the credit markets. While shares of Mastercard have performed well during the past year and a half, the stock has struggled lately. It fell 3.8 percent in January and another 3 percent so far in February. Meanwhile, rival American Express (AXP) has suffered losses in four consecutive months and is down more than 30 percent from its mid-2007 highs.

Yet, Visa is a highly profitable company—with total earnings of $861 million on $5.2 billion in revenues last year and the offering is expected to go over well. If so, it could help bolster investor sentiment in the equity market because it would be a convincing sign that investor demand for shares of financial-related companies remains strong, despite ongoing worries about high levels of consumer debt, problems in the housing markets, and the ongoing credit squeeze.

How long until Visa options begin trading? The exchanges decide when to list options on a new stock. In highly successful offerings, like Google (GOOG) a few years ago, the options follow the shares in short-order. Other times, however, options will be listed only when the shares see a period of consistent trading activity, and after the market makers have had to time to gauge the true levels of volatility in the underlying stock price.


Frederic Ruffy
Senior Writer
Optionetics.com ~ Your Options Education Site
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The credit card giant plans to sell 406 million class A shares between $37 and $42 a share

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