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Visa's IPO Could Ease Some Banks' Subprime Pain
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The IPO is far larger than previous offerings by U.S. companies. The biggest to date is AT&T wireless service's $10.6 billion offering in April 2000, followed by the $8.7 billion deal for Kraft Foods in 2001, according to Dealogic.
Robertson said Visa benefits from following MasterCard, which raised $2.4 billion in its IPO and whose market capitalization now exceeds $26 billion.
MasterCard "has spent all that time educating institutional investors about what it is that a company like Visa and MasterCard do," he said. "It might seem as if the market's kind of rocky, but the market is always looking for companies that they can really easily understand. After the scrutiny that MasterCard faced, I think investors understand what Visa is all about."
Analysts said Visa offers attractive growth opportunities because of its global operation, which could help the firm should U.S. consumer activity buckle.
"Although it's technically a financial company, it's really in the sweet spot given all the troubles that are afflicting the market now because it does not take the risk that the cardholder does not pay off their obligation," said David Dietze, chief investment strategist of Point View Financial Services. "This is a world where the credit card is fast supplanting paper. It's really a global changeover."
Still, not everyone is enthusiastic about Visa's prospects.
Randy Bateman, chief investment officer of Huntington Asset Advisors, said he pared back his exposure to credit card companies. Last summer, he significantly reduced his fund's holding in ACI Worldwide, a provider of software for processing electronic payments, on fears that consumers would cut back on spending. This could have a ripple effect on all credit card companies.
"We're still concerned about the consumer," Bateman said. "I'm afraid we're probably going to avoid Visa at this stage. I'd rather . . . miss some of the turn but be much more convinced that the consumer is heady and heading in the right direction."
Staff researcher Richard Drezen contributed to this report.
