Visa Inc. priced shares for its initial public offering at $44, above the expected price of $37 to $42, according to JPMorgan Chase & Co., one of the lead underwriters. The credit-card giant plans to sell 406 million shares in what — at $17.86 billion — will be the largest IPO in U.S. history.
If it floats its share overallotment of 40.6 million shares, the IPO could raise as much at $19.65 billion, well ahead of the $10.62 billion raised by AT&T Wireless in 2000.
Among global IPOs, the record is the $21.9 billion offering from Industrial & Commercial Bank of China Ltd. in 2006, according to data provider Dealogic Inc.
Visa's stock is expected to debut Wednesday on the New York Stock Exchange under the symbol V.
The blockbuster IPO is oversubscribed in the face of "extreme demand," analyst Scott Sweet of IPO Boutique said last week.
JPMorgan and Goldman Sachs Group Inc. are lead underwriters. JPMorgan would pocket about $1.1 billion by offering nearly 29 million shares as Visa's largest-selling shareholder, according to regulatory filings. Bank of America Corp. will sell 14 million shares, Citigroup Inc. 6.8 million and National City Corp. 10 million.
Visa is owned by some 13,000 U.S. banks. Slightly more than half of the shares are being sold to the public.
Visa's offering comes when the stock market and share offerings are being roiled by uncertainty about everything from mortgages to consumer spending. But the business of processing credit-card transactions is expected to be better sheltered from economic blows because consumers continue to switch to plastic for more of their purchases.
Shares of rival MasterCard Inc., which went public in May 2006, have performed well from their debut through the past several months of unsteady markets. Since its IPO, priced at $39 a share, MasterCard stock is up fivefold. Shares closed Tuesday at $210.25.
By contrast, Discover Financial Services has lost about half its value since being spun off by Morgan Stanley last year. In addition to owning a network, Discover also issues cards to consumers.
According to Visa's prospectus filed with the SEC late last month, Visa recorded 44 billion transactions in 2006, compared with 23.4 billion for MasterCard, its largest competitor. Consumers worldwide had 1.5 billion Visa-branded cards in their wallets at the end of September, compared with 916 million MasterCard-branded pieces of plastic at the end of 2007, according to company financial reports.
Visa investors could see operating margins double by 2015 as various Visa units worldwide are combined and the company becomes a public entity, says Morningstar Inc. senior analyst Michael Kon. His firm calculates the stock should be worth $74 a share.
Visa's IPO is unlikely to revive the market for stock offerings. In February, only four companies went public, raising $122 million. That was the smallest number since August 2003, when three companies came public, and the smallest total raised since June 2003, when IPOs generated $97 million, according to data tracker Dealogic.
