Visa’s shares soar in debut

After the biggest initial public offering in U.S. history, Visa Inc. shares soared 28% in their stock market debut Wednesday as investors bet that an accelerating shift to electronic payment would enrich the world’s largest processor of credit and debit cards.

The company’s shares were priced Tuesday night at $44 a share, raising nearly $18 billion. They finished Wednesday at $56.50, up $12.50, on the New York Stock Exchange. The run-up gave the San Francisco-based company a market value of about $45 billion.

Visa overcame turbulent market conditions to shatter the U.S. IPO record -- $10.6 billion raised by AT&T; Wireless eight years ago.

“To sell 400 million shares at a time like this is herculean,” said David Menlow, president of IPOfinancial.com.

Visa generated $5.2 billion in annual revenue last year as it handled more than 44 billion in transactions totaling more than $3.2 trillion. The volume puts Visa far ahead of its main rival, MasterCard Inc., whose shares have more than quintupled from their May 2006 IPO price of $39.

Making Visa even more alluring to investors, the company is well-insulated from the credit problems that have scarred many of the lenders that issue the cards bearing its brand.

Unlike those lenders, Visa doesn’t carry any consumer debt on its books. It depends on transaction fees, which have been steadily rising for years, including the last two U.S. recessions in 1991 and 2001.

Since the last recession, Visa has enticed consumers to use its credit and debit cards more frequently to pay for basic expenses such as groceries, gasoline and even utility bills.

Reflecting management’s confidence, Visa anticipates annual earnings growth of at least 20% for at least the next two years.