More on MasterCard's Planned IPO
Robin Sidel reports for the Wall St. Journal on MasterCard's plan for an initial public offering early next year.
Analysts and consultants were scrambling yesterday to calculate a potential valuation for MasterCard. Craig Maurer, an analyst at Fulcrum Global Partners in New York, estimated MasterCard in its entirety could be valued at $7 billion, or just under 2.5 times projected revenue for 2005.
Based on an SEC filing earlier this year, MasterCard's largest current shareholders are:
- JP Morgan Chase - 11.7%
- Citigroup - 6.2%
- Bank of America - 6%
- Euro Kartensysteme - 5.2%
- Europay France - 5.0%
If a MasterCard IPO were successful and sold 49% of MasterCard to the public for about $3.5 billion, these large shareholders could receive several hundred million dollars each in exchange for a portion of their current shares.
Gary Craft of Financial DNA commented on MasterCard's announcement earlier today:
A successful IPO by MasterCard would likely stimulate a watershed change among the major payment networks. Today's announcement could trigger copy cat activities among other payment associations, including MasterCard's larger rival, Visa, and smaller payment networks such as SWIFT, CHIPS, and even NACHA.In our opinion, were Visa not to respond in kind, it would quickly lose market share and see its borrowed equity value diminish as MasterCard attracts cheaper capital and stronger management talent to its fold. A mutual payment network cannot retain key employees nor attract favored ones when a competitor can provide more attractive remuneration, in our opinion.
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