Monday, February 25, 2008

More Details Emerging on Visa (V) IPO

Posted by TraderMark at 9:17 AM TweetThis
More news out this morning on the very eagerly (at least from this corner) VISA (V) IPO; an issue we've been talking about for many months. This is going to be quite the enormous issue, so like I've said in the past, it won't provide the real magnificent upside that Mastercard (MA) did simply because there was no established bar (via publicly traded competitor) when Mastercard began trading.
  • Visa said Monday it could raise almost $19 billion from an initial public offering, which would easily become the largest IPO in U.S. history.
  • San Francisco-based Visa Inc. said in a Securities and Exchange Commission filing it will offer 406 million shares at $37 to $42 per share. There will be an option for its underwriters to buy an extra 40.6 million shares to cover any excess demand.
  • The Visa IPO, even at midpoint price, would surpass the $10.6 billion AT&T Wireless raised in 2000. It would be almost as big as the two largest past deals combined -- AT&T's offering and Kraft Foods' $8.7 billion offer in 2001.
  • Mastercard raised $2.39 billion in its IPO nearly two years ago. Shares of Mastercard have risen fivefold since going public and are now trading at more than $203 each.
Long Mastercard in fund; no personal position

Posted by TraderMark at 9:17 AM Comments (3) | Edit This Post | Create A New Post

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3 comments:

madhatter said...

how are you going to play this? undoubtedly, once the visa ipo date is released, MA shares should sell off with people wanting to get into V. sell ma, buy v? use the dip to add more ma? I plan on having both in my portfolio but its really hard to gauge what weighting I want to have in each. have any preliminary thoughts on how you were going to play it?

February 25, 2008 2:12 PM  
TraderMark said...

Well if we were launched, I'd be applying for the IPO shares :)

I don't see why MA would fall - this appears to be Cramer theory - that only 1 can go up at the same time?

I do hope MA falls more so I can buy more. I have not been wanting to increase exposure >$200.

I'll have to look at VISA financials once I can see what their earnings power are. I assume the 2 companies will have similar growth rates (could be wrong there) and will trade at similar multiples. I'll be keeping MA, but assess VISA as it goes public. If the growth rates are similar, I'd simply overweight the cheaper one.

My first inclination is people will overdo VISA and drive it up too far and the main people who will get rich are those who were handed shares pre IPO.

February 25, 2008 2:36 PM  
madhatter said...

yea exactly, I definitely think V will be overdone on the upside and then sold back down to realistic multiples. my rationale behind MA going down or being choppy at the very least would be institutions freeing up capital from ma to put it into the V ipo where they know they can get a quick gain and then re-assess once V starts to trade at whatever multiple it will trade at. this is just one of those ipo's that everyone knows about, even the friends who don't actively follow the market.

i'm not saying there will be a mass exodus from MA, but I'm anticipating some selling as the ipo date draws near just from people/institutions taking profits in the name and then freeing up some cash for V. (especially those retail investors who got in on the MA ipo and saw how successful it was... they'll just rinse and repeat with V)

We'll see though. I'm very interested to see their financials... wish I could get a hold of some of the material they're presenting at the roadshow they've been doing.

February 25, 2008 6:35 PM  

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