Visa sets possible record $18.8 billion IPO

Visa sets possible record $18.8 billion IPO

NEW YORK (Reuters) - Visa Inc, the world's largest credit card network, said it may raise up to $18.8 billion in the largest U.S. initial public offering, despite unsteady financial markets and a global credit crunch that could eat into transaction volumes.

The eagerly-awaited offering calls for Visa to sell 406 million Class A shares at $37 to $42 each, for proceeds of $15 billion to $17.1 billion, according to a filing on Monday with the U.S. Securities and Exchange Commission. Visa said it might sell another 40.6 million shares to meet demand, boosting the IPO's potential size to $18.8 billion.

A successful IPO would surpass the $10.6 billion offering in April 2000 by AT&T Wireless Group and could value all of Visa well in excess of $30 billion. It would also follow a fivefold jump in shares of smaller rival MasterCard Inc (MA.N: Quote, Profile, Research) since that company raised $2.4 billion in a May 2006 IPO.

Visa, based in San Francisco, benefits as consumers worldwide rely more on credit and debit cards instead of cash and checks to make payments.

It also is not directly exposed to rising defaults and late payments because it does not issue cards, unlike rivals American Express Co (AXP.N: Quote, Profile, Research) and Discover Financial Services (DFS.N: Quote, Profile, Research) and lenders such as Bank of America Corp (BAC.N: Quote, Profile, Research), Citigroup Inc (C.N: Quote, Profile, Research) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research).

"Everyone is looking for a way to play the financial space without the credit exposure," said Scott Valentin, an analyst at Friedman, Billings, Ramsey & Co. "Plastic is replacing cash and checks, including on small purchases such as a meal at McDonald's. Every time a card is used, Visa gets a piece."

Visa is now controlled by about 13,300 member banks and finance companies. Much of the IPO proceeds would go to buy shares held by them, helping to offset rising credit losses.

Still, analysts said the timing is risky, given falling demand for stocks and IPOs amid worries the U.S. economy might be entering, or has already entered, a recession. A Visa spokeswoman declined to say when the IPO might take place. (Full Story)