$6bn Mastercard float will test Wall Street's appetite
Thursday 25 May 2006
Mastercard, the credit card network under fire for its high fees, ends four decades as a private organisation with a flotation on the New York Stock Exchange today.
The $2.65bn (£1.42bn) share sale is Wall Street's biggest for two years, and comes on the heels of market debuts for the internet telephony pioneer Vonage yesterday and Burger King last week.
Bankers are watching Mastercard closely for signs that recent stock market weakness might snuff out the mini-boom in flotations. The company's advisers were meeting last night to price the shares, which could value the company at between $5.3bn and $5.8bn.
Mastercard was set up by a coalition of banks to process electronic payments, and 1,400 banks, many of the small regional players, will get a windfall from the flotation. The biggest members include HSBC, which looks set to pocket $100m. JP Morgan Chase, the biggest shareholder with 10.4 per cent, could net more than $200m.
The flotation is a defensive move, aimed at shielding Mastercard's members, whose shareholding will be reduced from 100 per cent to between 46 and 49 per cent, from a legal assault by retailers and regulatory pressure across the globe.
Shopkeepers say they are being ripped off and that Mastercard and its arch-rival Visa International act anti-competitively to charge high fees for processing credit and debit card payments. Mastercard faces 40 class action suits in the US as well as political calls for an anti-trust investigation into the company. Last year, the UK's Office of Fair Trading ruled against Mastercard, saying it had breached competition law and that its fees amounted to a tax on consumers.
Mastercard's flotation takes the total money raised through share offerings on Wall Street this year to $21bn, almost 60 per cent more than at this point last year. Companies have been attracted by the buoyant stock market conditions, while investors have warmed to the big-name brands on offer.
Burger King's flotation raised $425m for the hamburger chain's private equity owners last week, while Chipotle, the Mexican fast-food chain spun off by McDonald's in January, is the year's best performing new share, having tripled since flotation. Traders gave a decidedly poor reception, however, to the flotation of Vonage yesterday. It had raised $531m, valuing the company at $2.6n, but its shares were down 14 per cent at their worst.
The company has attracted 1.6 million subscribers to its phone service offering voice calls over the internet, but it spends as much on marketing as it gets in revenue, and investors fear it may never turn a profit. Cable companies have begun to embrace internet telephony and are fighting back with cheap deals combining television, internet and phone services. Vonage has also been undermined by Skype, owned by eBay, which offers internet calls for free.
- 1 I've been called an abusive and dangerous parent, when all I did was listen to my transgender child
- 2 Why this father didn’t hide his daughter’s heroin overdose in her obituary
- 3 Smartphones are making children borderline autistic, says psychiatrist
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
Nepal earthquake in pictures: Photos show devastation caused by 7.8 magnitude earthquake
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Royal baby: Live updates as superbug closes ward at St Mary's Hospital where Duchess of Cambridge is due to give birth
Hermann Goering's daughter fails to reclaim items looted by Nazi deputy during WWII
Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
The sickening truth about food banks that the Tories don't want you to know
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...