Visa shares jump in market debut
New York, March 19, 2008
Shares of Visa were trading 31 per cent higher in the company's market debut on Wednesday, a day after Visa raised $17.9 billion in the biggest-ever US initial public offering.
Visa opened at $59.50, up 35 per cent over the $44 per-share offer price, before paring some of those early gains to trade at $57.68 on the New York Stock Exchange.
On Tuesday, San Francisco-based Visa, the world's largest credit card network, sold 406 million shares of class A common stock for $44 per share, above the forecast range of $37 to $42.
Visa is using about $10.2 billion of proceeds to redeem shares held by its largest shareholders, including banks JP Morgan & Co, Bank of America Corp, National City Corp and Citigroup.
Another $3 billion is being set aside to cover litigation costs, according to filings, and the balance for general corporate purposes.
The offering is the first bright spot for the 2008 US IPO calendar, which has fallen into the doldrums as growing credit market woes have spooked investors. The volume of IPOs year to date is about half of what it was a year ago, according to data tracker Dealogic.
Underwriters of Visa's deal, led by JP Morgan Chase & Co and Goldman Sachs & Co, have the option to purchase an additional 40.6 million shares to cover overallotments, which could boost proceeds by about $1.8 billion.
Visa has disclosed it expected to pay underwriters fees of about $500 million. By raising $17.9 billion, Visa surpasses AT&T's $10.6 billion IPO in 2000, which was the US record.
If overallotments are exercised, the IPO would place second worldwide after Industrial & Commercial Bank of China Ltd's IPO, which raised $22 billion in 2006, according to Reuters data.-Reuters