Visa IPO Review: Finance Trading Times

Visa IPO Review

The world wide well accepted Payment Gateway and credit card processing giant, VISA, is set to hit the stock markets. It is planning a mega IPO, which will be the largest in the US markets till date.
The credit card company, Visa, has decided to offer around 406 million shares in a price band of $37 to $42 a share, which amounts to raising something in the range $15 billion to $17 billion. Underwriters will have the option to buy an additional 40.6 million shares, pushing the total haul as high as $18.8 billion.

This will be the biggest ever IPO in the history of USA and Visa's IPO could also be the world's second largest ever, after China based Industrial & Commercial Bank of China's which raised a fortune of $21.9 billion in 2006, though it Initial Public Offering.

The precise dates for the IPO offerings are not known, but market experts believe that it could be offered sometimes around 17th of March. It is expected to be a major event not only for the US, but also for the global economy. In the current situation, where most of the recently listed IPO’s are trading below their offer price, the Visa IPO will set a benchmark.

Related: Current Status & Listing of Visa IPO, Latest: Visa Raises 17.9 billion $

To make a comparison, the perfect example would be of Mastercard. MasterCard was priced at $39 in May 2006 and is presently trading around $200. It's even gone up since the credit crunch last summer. This is mainly because MasterCard handles transactions and doesn't actually have to take on consumer debt.

Hence, Investors would definitely give a thumbs up to this IPO and who knows it may even make a landmark for the ailing US economy.
However, there is a major difference in the PE Ratio of the two IPOs.
The Price to earnings ratio of MasterCard stood at around 11, while that for Visa is at around 30. Hence, some experts are skeptical about the debut of Visa IPO in stock markets.
Anyways, things work randomly. Let’s see how the Visa IPO performs.
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1 Comment: Post your Comments

VIJAI said...(on 28 February 2008 at 11:28 )  

Hey Shobbit,

I just came across your blog. Trying to read some good posts. Good effort man..

Regarding VISA IPO, you seem to have just reflected the same points posted in the other websites. VISA IPO will go past the expectation because it has tremedous support from the banks which carry the debt who also going to get a share of the IPO money.. So bank is in full support for it. Also since VISA like mastercard don't carry any debts, its doesn't not carry any risk for the investors like Discover. Thats a valid point to note..


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