- The Washington Times - Wednesday, March 19, 2008

SAN FRANCISCO (AP) — Visa Inc. raised $17.9 billion late yesterday to complete the largest initial public offering in U.S. history and help prop up the wobbly financial services industry.

The world’s largest processor of credit and debit cards sold 406 million shares at $44 apiece to easily eclipse the previous U.S. record IPO of $10.6 billion set by AT&T; Wireless eight years ago.

The IPO price topped the range of $37 to $42 per share that Visa set three weeks ago just before its executives began meeting with institutional investors and analysts to drum up interest.

If investment bankers exercise an option on another 40.6 million shares, Visa’s IPO will end up raising $19.7 billion before expenses.

Visa shares, trading under the “V” ticker symbol, are scheduled to begin trading today on the New York Stock Exchange. The San Francisco-based company will debut with a market value of about $36 billion.

More than $10 billion of the IPO proceeds are being used to buy back some of the shares owned by the banks that have helped build Visa during the past 50 years.

The money is expected to help banks strengthen their balance sheets as they write off billions of dollars in loans that have soured during the worst housing slump since the 1930s.

The Visa windfall will supplement a series of Federal Reserve Bank measures that have pumped billions of dollars into the banking system.

JPMorgan Chase & Co., Visa’s biggest customer and shareholder, is in line for the biggest payoff from yesterday’s IPO — about $1.3 billion, based on figures provided in Securities and Exchange Commission documents.

That is five times more than New York-based JPMorgan has agreed to pay in a proposed takeover of investment bank Bear Stearns Co., a major casualty of the credit crisis.

Other big winners in Visa’s IPO include: Bank of America Corp., expected to receive roughly $625 million; National City Corp., about $435 million; Citigroup Inc., about $300 million; and U.S. Bancorp and Wells Fargo & Co., each getting more than $270 million.

All the banks will remain major Visa shareholders.

The IPO also is expected to generate more than $500 million in fees for Visa’s team of investment bankers, led by JP Morgan and Goldman Sachs & Co.

Besides paying banks, Visa is depositing $3 billion in an escrow account to insulate its shareholders from lawsuits claiming the company profited by stifling competition.

Those legal headaches are among the chief reasons that Visa decided to go public and pose the biggest investment risk in the IPO, said Aite Group analyst Gwenn Bezard.

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