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Visa Inc., the largest payment-card network, set a record for U.S. initial public offerings today by raising $17.9 billion, more than expected.
Underwriters sold 406 million shares of San Francisco-based Visa for $44 each, above the expected range of $37 to $42 each, according to Bloomberg data. That values the entire company at $42.5 billion, compared with $27.6 billion at rival MasterCard Inc., the industry’s second-largest company. The stock begins New York Stock Exchange trading tomorrow under the ticker “V.”
Chief Executive Officer Joseph Saunders is pressing ahead with the sale amid the worst market for IPOs since 2001. Demand for new shares has waned this year, with 133 companies raising $16 billion as of yesterday, 47 percent less than in the same period last year, according to data compiled by Bloomberg.
The IPO eclipses AT&T Wireless Group’s $10.6 billion stock offering in 2000 and ranks second in the world after the $22 billion debut in 2006 of Industrial & Commercial Bank of China Ltd.
Visa and MasterCard have benefited as consumers pay for more purchases with credit and debit cards instead of cash. Cards will be used for 55 percent of all U.S. transactions by 2011, rising from 40 percent in 2005, according to the Nilson Report, an industry newsletter based in Carpinteria, California.
Visa’s profit doubled to $424 million in the quarter ended Dec. 31. Revenue surged 76 percent to $1.49 billion.
Visa and MasterCard, which is based in Purchase, New York, are insulated from rising defaults and late payments because, unlike American Express Co. and Discover Financial Services, they don’t extend credit to cardholders. Banks that issue the cards take the credit risk.
The Visa share sale was managed by JPMorgan Chase & Co. and Goldman Sachs Group Inc. with assistance from 13 firms including Bank of America Corp. and Citigroup Inc.
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