Visa's $10b share offering will add lustre to next year
Analysts predict that next year's US initial public offerings will include a steady stream of activity, including credit card issuer Visa's $10 billion IPO.
Visa, the biggest deal so far in 2008, is coming to market after MasterCard Inc's stellar $2.4 billion 2006 IPO.
The company said its plans to list the shares on the New York Stock Exchange under the symbol "V", according to an amended registration statement with the US Securities and Exchange Commission. It has not disclosed how many shares it will offer, or the expected price.
"It will do well, as MasterCard has done incredibly," said Scott Sweet, managing director of research firm IPOboutique.com, who expects the Visa offering early in the year.
Hopes are high that the world's largest credit card processor will take the lead of its smaller rival MasterCard, which has seen its share gain more than 440 per cent since its initial IPO price of $39. MasterCard shares closed at $212.35 on Friday.
Things have been a bit bumpy lately for Visa, as reflected in its Friday disclosure that the company posted a loss in fiscal 2007. The company had a $1.1 billion operating loss, while operating revenue rose 33 per cent to $5.2 billion. The loss included nearly $3 billion in reserve for outstanding litigation.
It also disclosed it set aside $1.9 billion related to American Express litigation and a $650 million reserve related to Discover litigation.
A Visa spokesman could not be reached for comment on when the company will launch its offering, but it earlier said it was obligated to make "reasonable efforts" to complete the offering within 120 days of a restructuring that closed on Oct.ober 3.
At that rate, Visa would launch its offering by February. The IPO must be launched by early May if Visa wants to avoid having certain obligations of its financial services members suspended, according to the filing.
Under the restructuring, Visa combines Visa US, international and Canadian operations. Another affiliate, Visa Europe, will remain a membership organisation and take a minority stake in Visa Inc. The company processed 44 billion transactions last year worth more than $3 trillion.
While credit markets have tightened since MasterCard's debut about 18 months ago - raising concerns credit card defaults could rise and consumer spending shrink - analysts say the industry is still posting strong growth.
"The credit card market is growing 12 to 14 per cent (a year)," said Francis Gaskins, president of research firm IPOdesktop.com, who forecasts Visa will grab headlines, but fall short MasterCard's performance.
"It won't have the same growth; it will be steady but not blockbuster."
More than 200 US IPOs generated in excess of $50 billion in 2007, the most active year since 2000, according to data tracker Dealogic.
Based on companies that have filed for public listings on the NYSE Euronext's New York Stock Exchange, or on Nasdaq, 2008 also looks to be a busy year.
At the end of November, there were 280 IPOs in the pipeline, Dealogic said.
Jackie Brya, IPO leader for the Americas at Ernst & Young sees strong activity in 2008. By sector, Brya foresees deals from many of the same sectors that dominated the 2007 IPO landscape -- technology, health care and energy.
There was record attendance at Ernst & Young's recent annual IPO conference, including strong interest from energy and utility companies, Brya said.
"Clean energy," companies that provide more efficient, environmentally friendly, energy alternatives are another area likely to see IPOs over the next year or two, she said. ( Gulf )