Word: ipos
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...IPO has injected another kind of novelty into the region: stock fever. The newspapers were filled with ads offering loans - usually with exorbitant interest rates - to help Kenyans buy shares. Poor people who didn't even have bank accounts complained about a minimum investment requirement of 10,000 shillings (just over $150). And on the first day of the IPO, thousands of people lined up in downtown Nairobi to snap up shares. It was perhaps most emblematic that one Kenyan newspaper the Daily Nation, referred to potential investors as "punters," as if by buying Safaricom shares they were betting...
...seems counterintuitive. And many observers have correctly pointed out that Visa Inc. is largely immune from the downturn in consumer spending because it reaps its profits from fees charged on each transaction, as opposed to the total amount people spend. But several other underlying factors are driving this turbocharged IPO...
Perhaps the biggest reason that Visa's IPO price soared from $44 to $60 a share by noon on its first day of trading is simply that the company has massive growth potential, especially internationally. Visa Europe will remain a separate company for now, but "in the developing world, we are just scraping the surface," says Clifford Tan, an economist and visiting scholar at the Stanford Center For international Development. Visa's U.S. revenue grew a healthy 23% in fiscal year 2007, but its international revenue soared 57% over 2006. And as formerly cash-based economies in South Korea, China...
...auspicious sign, too, that Visa's biggest competitor, MasterCard, which went public at $39 a share in 2006, is now trading at over $200 and has a market cap of more than $27 billion. That's about $10 billion above what Visa Inc. just raised with its IPO - and Visa is the market leader with 40% higher earnings than MasterCard. It doesn't take a math whiz to see why Wall Street is all charged up on the king of cards...
...main reason Visa can contemplate an IPO now is that, for all the troubles, large parts of the global financial system continue to function just fine. If you have bad credit and want a mortgage or you run a private-equity firm and want to finance a $15 billion takeover, forget it. But if your credit's O.K. and you want to charge a trip to Hawaii or you're the profitable, growing leader of the global electronic-payments business and you want to raise $15-plus billion...