All articles by Verdict Staff
Verdict Staff
Visa raises $17.9bn in record-setting initial public offering
The long-awaited Visa initial public offering (IPO) has now been launched, with the payments network selling 406 million class A common stock for $44 per share, above the previously forecasted range of $37 to $42, to raise a record $17.9 billion. Visa expects net proceeds from the offering, after deducting underwriting discounts and commissions and estimated offering expenses, to be approximately $17.3 billion, providing a significant windfall for several ailing US banks. There were fears that the 18 March IPO might have been postponed amid the ongoing credit crunch, but it is believed by numerous analysts that the companys US bank shareholders may have put pressure on Visa to go ahead with the IPO after heavy losses resulting from the crisis. Bank of America stands to pocket $600 million from the deal and Citigroup should make $300 million. As Visas largest shareholder, JPMorgan is in line to make a profit of approximately $1.2 billion. With the uncertainty presently being faced by the financial markets across the globe, investors rushed to take advantage of the companys growth potential and its lack of exposure to the current credit meltdown.
PayPass debuts at UK sports venue
A series of successful trials in the US saw major sports venues implementing MasterCard PayPass technology. Now, MasterCard and MBNA have launched a trial for PayPass at the Manchester City football stadium. MasterCards Oliver Steeley tells Victoria Conroy about the contactless future. MasterCard and Visa may be battling each other for market share, but MasterCard has a clear lead in terms of rolling out contactless technology. MasterCard PayPass has now been rolled out globally, and in December 2007 the number of PayPass-enabled cards issued reached 23 million. One of the accelerators of PayPass in the US was its adoption at major sports venues such as Major League Baseball and National Football League (NFL) stadiums. Now, MasterCard is hoping that Europes first trial of PayPass within a sporting venue UK football club Manchester Citys stadium will have the same galvanising effect in Europe, where contactless is yet to take off in the same way. The trial will see season ticket holders at Manchester City issued with a reloadable MasterCard prepaid with PayPass contactless card, which can be used both to gain access to the City of Manchester Stadium utilising the existing smart card technology on match days and to purchase items inside and outside the ground. As it is a prepaid card, fans can also choose to top up the card online, over the phone or at PayZone points in UK retail locations. There are no charges to reload the card over the internet, and no POS transaction charges.
Target in talks to sell credit card stake
Target, the second-largest US discount retailer, is in negotiations to sell about half of its credit card portfolio to an undisclosed investment partner, in what could be a $4 billion deal.
Room for growth in Eastern Europe
While various cards markets in Eastern Europe are currently undergoing a rapid growth period, many of these countries still face a variety of challenges that include consumer awareness, low merchant acceptance in some areas, and differing levels of SEPA compliance.
Discover reports fall in net profits following Goldfish sale
Discover Financial Services has reported that its first-quarter net profit fell 65 percent, mostly related to a $158 million loss on the sale of its UK credit card unit Goldfish to Barclays earlier this year. However, lower borrowing costs offset the impact of sluggish consumer spending. The quarters results cap a depressing year for Discover, which was spun off from Morgan Stanley in mid-2007; the companys share price has been on a downward spiral since then, coinciding with a fall in consumer spending in the US.
Subscribe to our Newsletter
Get industry leading news, data and analysis delivered to your inbox
Region round-up
Koreas largest lender, Kookmin Bank, plans to spin off its credit card unit after setting up a holding company as part of efforts to beef up its non-banking business… Vodafone Italy and financial services provider Citi have renewed their existing partnership with the introduction of the Citi Vodafone One Visa credit card… Rwanda Commercial Bank has announced that it will be installing 100 ATMs throughout the country… Brazils Unik plans to launch a credit card targeted at people receiving pensions from the Brazilian governments INSS (National Institute of Social Security)…
Gloomy outlook for UK consumer credit
A combination of pressures on the UK consumer credit market means that issuers will have to employ an array of defensive measures in order to safeguard the quality and profitability of their lending portfolios.
Visa Inc says IPO plans are on track for October
Visa Inc, the newly formed entity that arose out of the restructuring of Visas US, international and Canadian units, says there is a 95 percent chance it will complete its initial public offering (IPO) by 10 October 2008, according to its latest quarterly filing with the US Securities and Exchange Commission (SEC). The probability estimation was part of a calculation used to value a class of Visa shares.In November 2007, Visa filed to raise up to $10 billion with the offering, potentially making it the second-largest US IPO after the $10.6 billion offering by telecommunications giant AT&T Wireless in 2000.
Region round-up
China UnionPay announced that merchants in 26 countries and regions were able to use CUP as their payment system by end-2007. Japanese issuer Sumitomo Mitsui Card and supermarket operator Aeon will collaborate to develop terminals capable of reading Aeons electronic-money card. Dutch banking giant ING is working with MasterCard to develop a near field communications (NFC)-based mobile payments system that will allow customers to use their handsets to pay for low-value purchases. In the fourth quarter of 2007, MasterCard posted a post-tax gain of $185 million from the sale of shares in Brazilian acquirer Redecard.
Troubled Goldfish is sold – again
Its been just over two years since Lloyds TSB offloaded its UK credit card unit Goldfish to Morgan Stanleys Discover Financial Services, and now the beleaguered business is set to change hands again with the announcement that Barclays has become the latest owner. Barclays will acquire the UK Goldfish card portfolio consisting of 1.7 million Goldfish and affinity card accounts with approximately $4 billion of receivables; the Goldfish brand; its operating facilities; certain legal entities; and staff.