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Notwithstanding the current turbulence in global financial markets and mounting fears of a US recession, Visa has raised US$17.9bn in the biggest ever initial public offering (IPO) in the history of American capital markets.

The credit card major has raised a total of about US$17.86bn by selling 406mn shares for US$44 each. That is US $2 more than the highest price predicted by San Francisco-based Visa in its prospectus.

The IPO eclipses AT&T Wireless Group’s US $10.6bn stock offering in 2000. It is the world’s second-biggest IPO after the US $22bn issue of Industrial & Commercial Bank of China Ltd. in 2006.

Visa shares will trade on the New York Stock Exchange starting today, under the symbol V. The company will make its debut with a market value of about US$36bn.

JP Morgan Chase and Goldman Sachs were the lead underwriters for the IPO.

JP Morgan was slated to offer nearly 29mn shares as Visa’s largest selling shareholder, according to regulatory filings. After the pricing of Visa shares above the expected range, that sale will now fetch roughly US $1.28bn.

Other big winners in Visa’s IPO include: Bank of America (US $625mn); National City Corp. (US $435mn); Citigroup (US $300mn) and US Bancorp and Wells Fargo, both getting more than US $270mn. All the banks will remain major Visa shareholders.

The IPO also is expected to generate more than US $500mn in fees for Visa’s team of investment bankers, led by JPMorgan and Goldman Sachs.

Investment bankers could still exercise an option to buy another 40.6mn Visa shares during the next 30 days. If that happens, Visa’s IPO will end up raising US$19.7bn before expenses.

Investors have shown interest in the Visa IPO due to the strong performance of rival credit card company MasterCard since its IPO in 2006. MasterCard shares have soared by about 4-5 times since their debut two years ago.

Meanwhile, Visa is depositing US $3bn in an escrow account to insulate its shareholders from lawsuits alleging the company profited by stifling competition. The litigations are one of the chief reasons that Visa decided to go public.

Visa processed 44bn transactions totaling US$3.2 trillion in 2006, according to the Nilson Report, an industry newsletter. MasterCard handled 23.4bn transactions totaling US$1.9 trillion in the same year.

Hurt by legal expenses, Visa suffered an US$861mn loss on revenue of US$5.2bn in its last fiscal year ended Sept. 30. Visa bounced back in its fiscal first quarter with a US$424mn profit, a 70% increase from the previous year.

source: Indiainfoline