A:

News of Visa's plans to go public created a buzz around Wall Street as soon as the papers were filed. The credit card giant cleaned out its closets - settling lawsuits and straightening out its accounting - in hopes of having the best IPO possible. MasterCard previously had raised $2.4 billion in 2006, establishing a record for credit card company IPOs. The question wasn't whether or not Visa would better the mark, but by how much.

The consensus was that Visa would set a new IPO record, erasing the $10.6 billion raised when AT&T spun out its wireless division as a separate company. Some people even held that Visa was placed ideally to double the mark. After all, credit card use was still growing internationally, usury laws in the states were circumvented, and recent changes to the bankruptcy act removed a good portion of default risk from the books of credit card companies.

Although Visa failed to double the record, it certainly did not disappoint. On March 18, 2008, Visa's IPO came in at $17.9 billion dollars. For the individual investor, the IPO was nice to look at, but nothing to participate in. A large chunk of the wealth ended up in the pockets of issuing banks like JPMorgan Chase, Citigroup and others in the underwriting syndicate. The underwriting syndicate collected around half a billion dollars in fees and also held onto large blocks of shares for their portfolios. Next came the institutional buyers and funds, buying up nearly everything the banks offered up. Basically, the only way to get a chunk of Visa's IPO was to be invested in a fund that bought in.

Investors will have their chance as the stock trades on the open market, going up and down as Visa tries to fulfill the expectations that come with a $17.9 billion dollar IPO.

For more on this topic read, IPO Basics: Introduction.

This question was answered by Andrew Beattie.

RELATED FAQS
  1. Can you pay off your Best Buy credit card in store?

    Learn how you can pay your BestBuy credit card in stores using cash or check. You can also pay by mail, online or over the ... Read Answer >>
  2. Can I still use my credit cards if I'm on a debt management program?

    Learn how to find out if you can keep, use or apply for credit cards while on a debt management program and what kinds of ... Read Answer >>
  3. How do secured credit cards help me build my credit score?

    Find out how secured credit cards function and why they can be very useful for those looking to build or rebuild their credit ... Read Answer >>
Related Articles
  1. Investing

    Visa Stock at 52-Week Highs Ahead of Earnings (V)

    Ahead of Visa's second quarter earnings results due after the closing bell Thursday, the credit card issuer has paid off handsomely.
  2. Investing

    How Visa Counts On Your Free-Spending Ways

    The credit card transaction business is so profitable, Visa Inc. doesn't even bother lending money. Here's how they make their money.
  3. Personal Finance

    Visa vs. MasterCard: Is There a Difference?

    Visa and MasterCard are two of the most widely used credit card brands. But are the differences between the two significant enough to influence consumers?
  4. Investing

    Why Visa Is a Solid Long-Term Bet

    Here's look at Visa, which has been an impressive performer since its IPO in 2008. It's now set to acquire Europe Visa.
  5. Investing

    Visa to Acquire Visa Europe for 21.2 Billion Euros

    On Monday, world’s largest payment network provider Visa Inc (V) announced that it will strategically acquire its former subsidiary Visa Europe.
  6. Investing

    Visa Notches Another Quarterly Earnings Beat

    Visa (NYSE: V) continues to perform well. In its first earnings release of this year, the credit card network exceeded analysts' estimates for both revenue and profitability. For its fiscal ...
  7. Personal Finance

    How Credit Cards Built A Plastic Empire

    A decade before Mastercard or Visa existed, the first credit card company was introduced.
  8. Investing

    Visa Beats on Q4 Revenue and EPS, but Not Guidance

    Payment system giant Visa (NYSE: V) reported a quarter that topped analysts' estimates, but forward guidance didn't quite meet expectations. For its fiscal fourth quarter, Visa booked revenue ...
  9. Investing

    Visa Stock Upgrade by Guggenheim (V, MA)

    Shares of Visa rose as much as 2.5% Monday, reaching a session high of $77.60 after the company received an endorsement by analysts at Guggenheim.
  10. Investing

    Credit Cards and the Cashless Society

    Visa and Mastercard are two great ways to play the continued transition to a cashless society.
RELATED TERMS
  1. Visa Card

    A credit, debit or prepaid card branded by Visa, a major payments ...
  2. Exit Visa

    A government-issued document granting an individual permission ...
  3. Bank Card

    Any card issued against a depositary account, such as an ATM ...
  4. Base II

    A data processing network operated by Visa USA for the clearing ...
  5. Base I

    The data processing network used by Visa USA to process and provide ...
  6. Primary Account Number (PAN)

    The 14, 15 or 16 digit number that appears on the primary account ...
Trading Center