MasterCard went public on New York Stock Exchange on Thursday after a wait of four decades. Winston Dobbs was the co-ordinator of the historic float, which raised $2.4 billion. And there was even better news for shareholders at the close of trading. MasterCard’s stock climbed a whopping 18% in its debut session.
Thriving in tough times
Dobbs, the Chief IPO Specialist at JP Morgan, confirmed the MasterCard event had smashed records. This was the biggest US IPO since 2004, he said. Moreover, it was a special achievement since it came in a “very choppy market.”
The company had faced concerns over the underperformance of other recent IPOs. Vonage, for instance, had the weakest opening of the year on Wednesday. And it shed another 14.7% a day later. In addition, there were issues about potential lawsuits against MasterCard over interchange fees.
As a result, shares started at a discounted price $1 below the $40-to-$43 estimated range.
“But it’s not where you start,” said Dobbs. “It’s where you finish.”
A recipe for IPO success
Above all, MasterCard remained a excellent investment, Dobbs said, because of its strong business operations. This was his number one consideration when choosing IPO clients.
“The company runs its business with a watchmaker’s precision. The litigation issues are the simple cost of doing business. And MasterCard will defend itself well.’”
Stockholders of the $5.3 billion company include J.P. Morgan, Citigroup, Bank of America and HSBC. Based on the current fundamentals, it drew a buy rating at Soleil Securities Group.
MasterCard CEO Robert Selander declared the IPO “a major milestone. “ “It reinforces our commitment to building value for our stockholders and customers,’ he said.
The company will retain $650 million of the proceeds. The balance will be paid out to shareholders.