Translated material
Payment publicity
Visa is restructuring its business ahead of its IPO
The largest international payment system, Visa International, has officially announced the restructuring of its business as part of an IPO, which will take place in early 2008. Experts expect Visa's public offering to be no less successful than MasterCard's IPO a year ago.Late last week, Visa filed a formal application with the US Securities and Exchange Commission to re-register as a public company. During the IPO, the payment system intends to sell 51% of its 775 million shares. The rest of the stake will remain with Visa member banks, the largest of which are Bank of America Corp., Wells Fargo & Co. and JP Morgan Chase & Co. Currently, Visa shares are owned by 21 thousand banks located around the world.
The company plans to merge several divisions - Visa Canada, Visa USA and Visa International - into a public corporation, Visa Inc. The European office - Visa Europe - will remain an independent company. The business restructuring is expected to be completed before Visa's shares are listed on the New York Stock Exchange. As stated in a letter to Visa member banks, signed by the company's CEO Joseph Sanders, "the restructuring should increase Visa's competitiveness and improve the coordination of the company's activities in the world."
The funds raised will help Visa significantly increase its capitalization. It is expected that the money from the sale of shares will be invested in emerging markets, as well as in the creation and distribution of new technologies. In addition, the status of a public company will help Visa member banks avoid prosecution due to the fact that many of the actions of the payment system were previously recognized as not consistent with fair competition. Several years ago, US authorities banned Visa and MasterCard from preventing banks from issuing cards from other payment systems, in particular AmEx and Discover.
As you know, it was precisely accusations of monopolism and imposing one's own rules of the game that last year forced Visa's main competitor, MasterCard, to also conduct an IPO. From the sale of its shares, it received about $2.4 billion and used about $650 million of it to create a special legal defense fund. It is still unknown how much money from the planned IPO will be spent by Visa to protect its interests. As well as how much money the company intends to raise during the initial offering.
Foreign analysts believe that investors will be enthusiastic about Visa's publicity, because, as MasterCard's experience shows, the placement can be quite successful. In just a year, MasterCard shares quadrupled, capitalization increased to $22.5 billion, although this company’s financial indicators are much more modest than Visa’s. Thus, according to the results of the six months of the current financial year, Visa's net profit increased by 68%, to $525.9 million, and operating profit to $2.36 billion. MasterCard's indicators for the same period are significantly lower: net profit - 525. $9 million, operating profit - $1.75 billion. Note that in addition to MasterCard securities, shares of Morgan Stanley and American Express Co, also considered competitors of Visa in the plastic card market, are traded on the stock exchange.