Word: ipos
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...best time, you might think, to sell shares in the biggest initial public offering (IPO) in Wall Street history. Especially not a financial IPO. Yet here we have credit-card giant Visa, now owned by its member banks, announcing plans to peddle up to 446 million shares of stock in late March for an expected take of between $15 billion and $19 billion...
...Giant IPOS are usually a sign of good, or at least frothy, times. The current record haul for a U.S. IPO, $10.6 billion, was reaped by AT&T Wireless in April 2000--just after the great tech-stock bubble began to deflate but before anybody realized it. (The world-record holder is and apparently will remain the Industrial & Commercial Bank of China, which raised $21.6 billion in an IPO...
What gives with Visa? One possibility is that the company and its investment bankers are deluded and the IPO will crash and burn--but the current thinking on the Street is that it won't have trouble finding buyers. Another is that the financial types who've been crying crisis have been crying wolf. But the housing market is in its worst slump since the Depression. Some debt markets have completely stopped functioning. The overindebted American consumer is showing signs of great stress...
...from a year earlier) from transaction fees, not lending, so it doesn't have to worry nearly as much as banks do about people making their credit-card payments. Another is that the banks that own Visa stand to make more than $10 billion from the IPO--JPMorgan Chase alone should clear $1 billion--and they need the money...
...average late fee soared 162% from $12.83 to $33.64, according to CardTrak.com. Fees now account for 39% of issuers' revenue, up from 28% in 2000 (interest accounts for the rest), according to card advisor RK Hammer. The industry is so buoyant that transaction-giant Visa is planning an IPO this spring that could raise more than $10 billion in capital...