Visa IPO won't be hit by turmoil

Visa Inc, which plans to float its shares on the New York Stock Exchange today in the biggest US initial public offering ever, will not be deterred by market turmoil that has taken a severe toll in recent days, analysts said.

"I do hear that the deal is on and is expected to be strong," said Sal Morreale, who tracks IPOs for Cantor Fitzgerald in Los Angeles. Visa has filed to sell 406 million Class A common shares at $37 to $42 apiece, for proceeds of $15 billion to $17 billion.

If demand is strong, an additional 40 million shares could sell, pushing proceeds as high as $19 billion. Even at the low end of expectations, the IPO would set a record in the United States, beating out AT&T's $10.6 billion deal in 2000.

The deal could produce a windfall for cash-strapped banks. Based on the mid-range of Visa's expected IPO price, about $10.2 billion of proceeds would go to large Visa stockholders that include JPMorgan, National City, Bank of America and Citigroup.

The IPO could also provide a boost for investment banks, which get fees from underwriting deals, after the market for US initial public offerings all but came to a standstill in recent months, as the growing credit crisis prompted investors to withdraw.

Visa's IPO could generate around $500 million in fees for underwriters, according to an amended registration statement with the US Securities and Exchange Commission.

Agencies

(China Daily 03/19/2008 page16)