VISA – Initial Public Offering

When Dee Hock coined the term VISA in 1975, he foresaw a future and initial public offering. The service has gained global acceptance and acted as a unification of BankAmericard, Braclaycard, Chargex and other licensees. True to his vision, VISA became and continues to be the synonym for payment technology and credit card companies across the world. With the growing popularity of the brand, the name was later changed to a recursive acronym, VISA (VISA International Service Association). Before going public in October 2007, VISA consisted of four non-stock companies incorporated separately: VISA International Service Association (VISA), VISA U.S.A. Inc., VISA Canada Association and VISA Europe Ltd. In late 2006, VISA announced its decision to become a publicly traded company, VISA Inc. after merging the four divisions mentioned above in an attempt to venture outside European boundaries.

This restructuring was the first step towards one of the largest and high profile US initial public offerings. Within a year after its rival credit card company, MasterCard filed for an initial public offering and just month after the restructuring of VISA was complete, VISA Inc. filed for a $10 billion initial public offering with the Securities and Exchange Commission. A $2.1 billion settlement with American Express Co over an antitrust lawsuit is seen as another reason for this decision. However, the market scenario at this time was anything but positive. The investor confidence was at an all time low thanks to the collapse of respected banks such as Bear Sterns.

The entry of VISA into the market was highly anticipated due to the possible positive impact on the market and on the banks which co-owned VISA. In March 2008, VISA went public with half of its shares priced between $37 and $42. Ultimately, 406 million shares were sold at $44 per share, $2 above the high point raising $17.9 billion. This remained the largest initial public offering in the history of United States until General Motors replaced it in 2010. After underwriters such as JP Morgan, Goldman Sachs, & Co purchased additional shares using the over-allotment option, the count rose to 446.6 million shares with a capital of $19.1 billion.

As a result of this success, the investor’s confidence in the market was reinstated. Moreover, the initial public offering also provided VISA with enough capital to venture into newer markets such as Asia, the Middle East and Latin America which were greener pastures compared to the saturated markets of the U.S. and the U.K. Currently, the ‘V’ ticker symbol on the NYSE continues to be strong and steady.

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