Visa Ups the Stakes With $19 Billion IPO Which Is Expected To Shatter U.S. IPOs On Record

Implications: Visa's much anticipated IPO could shatter the current Top 10 U.S. IPOs on record and go down in history as the largest U.S. IPO if Visa's share price hits its target price of $37 to $42 per share. Visa is facing a sluggish market that is hampered by the U.S. credit crunch. Visa is hoping to usurp its rival MasterCard who's IPO raised $2.4 billion. Visa had originally indicated it wanted to raise $10 billion, however, in its amended registration statement filed with the SEC, Visa plans to raise up to $19 billion in its long awaited IPO. Visa will float a little more than 50% of the company to the public. Despite current market conditions, debit and credit card volume is projected to grow by 11% CAGR annually from 2006-2012 and Visa owns 66% market share of debit and credit card transaction volume. Visa is pushing for a "cashless" society, which has influenced debit and credit card growth as consumers' payment preferences shift from cash and checks to debit and credit cards.

Analysis: "V" for Visa will trade on the NYSE beginning sometime in March 2008 and the new Visa Inc. will include the Canadian, U.S. and International Operations and the European Unit will take a minority stake in the new Visa. Barclays is the biggest Visa card issuer in Europe and Barclays is expected to gain a substantial windfall from the deal.

1.  Visa's settlement with AmEx for $2.25 billion in 2007, removes the legal headache of a antitrust lawsuit, which could have had a negative impact on Visa's share offering price and paves the way for Visa to potentially raise up to $19 billion in its IPO

2.  Visa receives "interchange fees" for every transaction and because Visa isn't exposed to bad debt on cards bearing its logo, this could bode well for its major shareholders; JP Morgan Chase, Bank of America, Citigroup and Wells Fargo, who are expected to reap multimillions from Visa's planned IPO

Takeaway:  Visa's push for a "cashless" society has drove transaction volume up for debit and credit cards. Visa processed over 44 billion transactions worth over $3.2 trillion and Visa could be banking on consumers to pay with their debit and credit cards for everyday purchases to continue to push debit and credit cards volumes upward and Visa's IPO may provide the market with the "boost" it desperately seeks in a bearish market.