Visa IPO Raises $18 Billion, and Big Issuers See $ Signs

What credit crunch?

Visa Inc. (NYSE: V) raised nearly $18 billion through its initial public offering late Tuesday, setting a benchmark for garnering the most money ever through an IPO. The San Francisco-based payments network sold 406 million shares at $44 apiece to money managers and other professional investors. The price surpassed the range of $37 to $42 per share that Visa had announced several weeks as it prepared for the IPO.

This morning Visa shares were trading up 25 percent to $55 with 85 million shares trading hands. Visa shares trade under the ticker symbol V on the New York Stock Exchange.

Investment bankers will have the opportunity to buy another 40.6 million Visa shares in the next 30 days. If that right is exercised, the IPO could end up raising $19.7 billion.

Visa has long been owned by the banks that issue cards under its name. Visa earns its revenues by charging fees for transactions conducted with its card. The issuers, not Visa, take on the risk of cardholders that can’t pay their bills.

Visa will spend an estimated $10 billion to buy back shares owned by its member banks, creating a welcome windfall for banks reeling from the faltering economy.

The Associated Press reports that JPMorgan Chase could receive as much as $1.25 billion from Visa, while Bank of America could garner $625 million, National City Corp., $435 million, Citigroup $300 million, and US Bancorp and Wells Fargo more than $270 million.

Consumers have increasingly used plastic for purchases, providing rising revenues for Visa and its rival MasterCard. In 2006, Visa processed 44 billion transactions worth $3.2 trillion while MasterCard conducted 23.4 billion transactions worth $1.9 trillion, according to payments industry trade publication Nilson Report.