VISA - It's Everywhere You Want To Be

source: prospectus

BIGGEST U.S. IPO EVER NETS $17-19 BILLION - BIG GREEN SHOE FOR UNDERWRITERS

VISA, the leading card payments groups, offered itself up to the public today. Why?

It's not clear. But, maybe the phenomenal performance of the MasterCard IPO (up over 400%) caused some to want to cash in. And, boy, have they: Priced above it's guessed range, finished trading up nearly 30% from the offering price. Wow.

Looking at the prospectus, you can see why VISA is everywhere you want to be. Basically a low/no-risk skimming operation, they take fees for processing transactions through a network of affiliates.

Sure, they spend a whopping 20-25% of revenues on advertising (almost as much as personnel expense!), but they put up snappy return-on-asset and return-on-equity figures. What pension they offer is overfunded and there is very little debt.

Projections of straight-line growth are never true. The impact of identity theft on the future of electronic transactions is unknown.

TOP TEN DEALS BY VOLUME

Top 10 U.S. IPOs - First Day of Trading

1. 1. Visa Inc. (2008): +28.4 percent
   Deal Size: $17.9B
   IPO Price: $44; First Day Close: $56.50
2. 2. AT&T Wireless (2000): +7.8 percent
   Deal Size: $10.6B
   IPO Price: $29.50; First Day Close: $31.8125
3. 3. Kraft Foods (2001): +0.8 percent
   Deal Size: $8.7B
   IPO Price: $31.00; First Day Close: $31.25
4. 4. United Parcel Service (1999): +36.5 percent
   Deal Size: $5.5B
   IPO Price: $50.00; First Day Close: $68.25
5. 5. CIT Group (2002): -4.3 percent
   Deal Size: $4.6B
   IPO Price: $23.00; First Day Close: $22.00
6. 6. Conoco (1998): +8.2 percent
   Deal Size: $4.4B
   IPO Price: $23.00; First Day Close: $24.875
7. 7. Blackstone Group LP (2007): +13.1 percent
   Deal Size: $4.1 billion

RUNNING SCARED?

Why the big pop? Could be just excitement, but there is also this:

"They had to place Visa shares in strong hands. They didn't want another Blackstone debacle," says Scott Sweet, managing director of IPO research firm IPOBoutique.com. On Blackstone's (BX) first trading day, the very first trade of the day was a 19 million-share sale, which Sweet says was the largest stock flip in IPO history.-Fortune

This has to be a candidate to enter one of the indexes (possibly as Bear Stearns exits?).

Whatever the case, the few news desks that have offered a number, suggest that "V"'s debut implies a price-to-earnings of over 22. It's not cheap...

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