Visa USA Files to Go Public

SAN FRANCISCO – Hoping to capitalize on the hot market for payments systems, Visa USA filed plans Friday to raise as much as $10 billion with an initial public offering. The plans come a little more than a year after Visa’s chief competitor, MasterCard, raised $2.4 billion with its own IPO, and has card network Discover Financial, parent of PULSE EFT, is also planning to go public. MasterCard has been one of the hottest stocks on the market since then, with the shares more than quadrupling in price, to close at $168.43 on Friday. Like the MasterCard IPO, the biggest beneficiaries when Visa goes public will be the dozens of banks that make up its membership, including major U.S. financial institutions like Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co. They stand to reap hundreds of millions of dollars in capital gains if they sell part of their stakes. Visa, which is owned by more than 13,000 banks and credit unions that issue its cards, reported profits of $465.1 million for its fiscal 2006. Visa profit was $525.9 million in the six months of the fiscal year ended March 31, as Visa's operating margin almost doubled. Over the same period, MasterCard reported a profit of $255.8 million on net revenue of $1.75 billion. Visa, which started in 1958 by BofA as the BankAmericard, has long been the dominant player among the world's major credit card brands. MasterCard became a serious rival when it was formed by a group of banks in 1965.