Visa IPO by gde12260

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									  “Life Takes Visa”



By: James Kenney
 Vice President
• Most recognized as a leading credit card provider
• Owned by several different banks (i.e. BofA, JP Morgan, Citi)

•Not just plastic:

             •Global   Processing Company servicing financial institutions

             •Payment  Product Platforms including consumer credit, debit,
              prepaid accounts and commercial payments

             •Serves   as an intermediary between banks and card users

             •Generates    revenue through fees charged to both merchants and card issuers

             •VISA   and MC currently charge about 2% versus 2.5% for AMEX

•The Hard Numbers
             •Handled   Forty Four Billion Transactions totaling $3.2 Trillion, or 60% of market

             •Compared   to $1.9 Trillion USD processed by rival MasterCard, 39% of market
• “The Boston Fee Party” of 1991

• AMEX had given favorable merchant fees to restaurants in
Boston, granted they only accepted American Express cards

• Restaurant owners in Boston began boycotting AMEX and
insisted on using VISA and MasterCard

              • AMEX was charging 4% per transaction
              • VISA and MC were charging just 1.2% per transaction



• Eventually over 250 restaurants across the US boycotted the
use of AMEX, until they finally brought down their fees
• When a company becomes “public”


• The very first time a private company issues shares of
stock that can be bought and sold by the public

• Company will hire an investment bank to assist in the
IPO process, and subsequent raising of capital
          • type of security to issue (common or preferred)
          • best price

          • best timing and process (i.e. “Dutch auction”)
                                 Corporate Finance
Visa plans to raise
                                 team assess the         The team decides to issue
$150 million in
                                 value of the            common stock at $22 per
capital by issuing
stock. They invite               company in              share. They also prepare a
                                 relationship to the     prospectus to market the
five banks to bid for
                                 clients goals and       offering and files
the business. They
                                 timetable. They call    registration materials with
assess each
                                 on equity research      the SEC
competitors view
                                 and S&T team to
and past experience.
                                 predict current
Piper wins the
                                 markets reaction to
business!
                                 the offering and also
                                 to develop price and
                                 marketing plan



                        Visa NYSE: V shares are
                        released to the sales force        In the final hours, the price
                        (institutional and retail)         of the shares is finally set.
                        they distribute prospectus         The syndicate desk
                        and sells shares to                underwrites (buys) the
                        investors                          equity along with a group of
                                                           other investments banks


                                                                                       Source: Dave Kozhuk
• First announced plans in October of 2007


• VISA finally provided details of the transaction very
recently: February 25th 2008

• Plans to issue 406 million shares (~ 51% of company)


• Target price is from $37 to $42 a share
          •   raise anywhere from $15 to $19 billion dollars


• Scheduled for the week of March 19th, 2008
• Company ownership currently includes many bulge
bracket banks which have been hit hard by the sub-
prime mess and the credit crunch

• The $15 to $19 Billion raised will go towards alleviating
some of the problems facing these banks

• VISA also wants to become listed on an exchange, so
that the public can buy and sell shares (ownership)
          •   retail and institutional clients
•Would be the biggest IPO in US history and 3rd largest
globally
      1. Industrial and Commercial Bank of China ($22 billion) 2006
      2. NTT Mobile ($18.1 billion) 1998
      3. VISA ($15 - $17 billion) 2008
      4. ATT Wireless ($10.6 billion, currently largest in US history)


• Provide a   Stimulus for the IPO market
      • only 18 IPO’s have happened this far in 2008
      • 48% reduction from a year ago
• Brings back memories of MasterCard’s IPO
      •$39   price per share back in May 2006


• MasterCard’s stock has skyrocketed 400%


• Closed at $191 today
             •   is this “priceless” ?


• Some are skeptical that VISA’s IPO will result in such
a huge return
• "It's a big deal being done in a bad market," says
Renaissance Capital’s Kathy Smith

• "It's huge. A lot of people will be watching it to see if it
gets done," says Joel Greenberg, partner at law firm Kaye
Scholer.

• Visa's price-earnings ratio (stock price divided by earnings
per share), based on the middle of its price range, is 30
times its fourth-quarter earnings, he says. That's well above
MasterCard's 11 P-E at its IPO, Gaskins says. "Is this another
MasterCard? The answer is no," he says. (Frank Gaskins of IPOdesktop)

								
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