Visa's IPO

Visa's IPO in 2008 was marked by several key factors leading to its success:

1. Class Action Lawsuit: Prior to the IPO, Visa faced significant uncertainty due to a class action lawsuit filed by merchants against Visa and Mastercard over interchange fees. This uncertainty loomed over Visa but was cleverly managed during the IPO.

2. Liability Management: To handle this, Visa created B shares, which isolated the liability from the class action lawsuit. This meant that the new shareholders buying the A shares during the IPO would not bear the legal risks, making the stock more attractive and ensuring a smoother public offering compared to Mastercard, which had a less favorable IPO earlier 1.

3. Economic Context: Visa's IPO happened right as the financial crisis was starting, which, although seemingly ill-timed, ended up helping banks that owned Visa. The IPO raised $18 billion, making it the largest in U.S. history up to that point, with a $90 billion initial market cap. This capital primarily benefited the selling banks, acting as a financial lifeline during the crisis 1.

4. Business Model: Visa's business model, functioning as a central information network connecting buyers to sellers without bearing the risk of transactions, proved to be highly effective and profitable. This model significantly contributed to its robust financial health and attractiveness to investors 1.

These strategies and the context underscore why Visa's IPO was considered a major success and a pivotal moment in its corporate history.