Visa: IPO or Bailout?

The Visa (V) IPO is coming and it is going to be BIG. A few days ago, I speculated that the IPO may be pushed back as the markets were in no mood for an IPO, even as few have been brought to market of late. It was, and is, not the most opportune time as investors are frazzled and institutions are disquieted during what is shaping up to be a historic and cataclysmic economic event born out of our general debauched view of leverage. (Barry Ritholtz: thanks for the Thesaurus idea- I hope I didn’t embarrass myself!)

So, what does that mean for Visa? If you look at the proceed distribution, according to Dealbook, it is rather interesting to note who is receiving $1.25 billion:

Even so, the offering will generate a windfall for Visa’s thousands of member banks, which own the company. JPMorgan Chase is expected to reap about $1.25 billion, while Bank of America, National City, Citigroup, U.S. Bancorp and Wells Fargo are likely to receive several hundred million dollars each.

Wall Street firms, in the meantime, stand to collect upward of $500 million in underwriting fees from the sale.

At the same time over 75% of the recent IPOs that had been scheduled have been postponed or canceled as the market is not capable of capitalizing new issues when it is so close to margin calls. Visa’s get-it-to-market-and-fast attitude for their IPO is a flagrant and obvious bailout for a few of the institutional beneficiaries. Time is the ultimate enemy in this mêlée against insolvency. The money is needed and it is needed NOW!

So, the Visa IPO is a go, no matter how much better it would have priced if times were different. I think that with the potential for insolvency increasing, postponing could be a prove disastrous for one or two of the member banks desperately needing a fast infusion of cash to continue business as “usual.”

Comments

[Jonathan Scott:]

sounds like you're saying it's a buy

2008 Mar 19 01:59 PM

[tj115:]

It is definitely a buy. It will shoot up, like mastercard did, and beyond. I have no idea why you would not buy into it because it will for sure go up for the next few weeks, probably a ton.

2008 Mar 19 02:28 PM

[CardWatcher:]

Enter your comment here
Andrew - Spot-on! Why more investors aren't realizing what you wrote about Visa is a mystery. The lead plaintiff behind the multi-billion dollar merchant interchange litigation against the card associations has several related updates on the Visa IPO at:
WayTooHigh.com

2008 Mar 19 02:37 PM

[KEVIN I:]

V (VISA INC.)

58.89 +14.89 (33.84%) Mar 19 3:10pm ET
Open: 59.50
High: 69.00
Low: 55.00
Volume: 164,706,636
Avg Vol: N/A
Mkt Cap: N/A

BUY " V '' IT HAD ITS IPO THE OTHER DAY. IT WILL BE THE NEXT MASTERCARD "MA". MARK MY WORDS!

2008 Mar 19 03:43 PM

[investmaui:]

When do you think they'll have options available on it??

2008 Mar 19 06:44 PM

[tj115:]

I bought 200 shares of Visa and I am planning on holding on to them for a long time. It is almost definitely a stock that has no where else to go but up. Visa will be the next $200.00 stock, easily. Over time? Probably.

2008 Mar 20 08:54 AM

[User 172125:]

If you don't own visa you are mentally retarded- according to goldman sachs. If you don't own Visa and you have children they will be on the special ed bus.......

2008 May 07 02:15 AM