Who Really Benefits From The Visa IPO?

Amidst all the hoopla over the possibility of Visa (V) floating the biggest IPO in U.S. history, WSJ blogger David Gaffen points out that:

[I]t’s not really as if the company is planning on using the money from the offering to expand the business, or even to pay down debt.

At least $10 billion of it, and perhaps more than $12 billion, will be used to buy back their own Class B and Class C shares from major shareholders — the banks.

Meanwhile, NewsVisual has a knowledge map showing that the only member of Visa's Board of Directors who owns company stock is Robert W Matschullat, a private equity investor and former head of worldwide investment banking for Morgan Stanley(MS).

According to NewsVisual, "this could mean that Matschullat might reap significant financial benefits as a result of the IPO."

Finally, the Dead Presidents blog remarks that:

The San Francisco-based credit card processor expects to see high demand for its stock, despite the housing-led credit squeeze that is threatening consumers` spending and their ability to keep up with debt payments.

But Visa, like its public rival MasterCard Inc, is a card processor, not a lender, and has a strong presence in other countries where many people are just starting to use plastic instead of cash. And Visa is the largest US card company by market share -- its transactions, in number and dollar amount, in 2006 outpaced those at MasterCard and American Express Co.

Other Articles of Interest:

• DealBook: The Return of the Mega-Offering

• Seeking Alpha: Visa IPO to Help Recapitalize U.S. Banks

• Huliq.com: VISA IPO Will Make Some Market Waves By Being The Largest IPO

Comments

[Alpha Seeker:]

This Visa is a bloated cow that is going to put a new meaning in the IPO flop dictionary. Short that sucker.
Mark my words, this thing is loaded with goo. Bad timing, weak company, it just typical Wall Street rip off thing. Mastercard is a much better company.

2008 Feb 26 03:02 AM