Catapulted by the biggest IPO in U.S. history, Visa shares soared more than 30 percent in their stock market debut today as investors bet...

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SAN FRANCISCO — Catapulted by the biggest IPO in U.S. history, Visa shares soared more than 30 percent in their stock market debut today as investors bet an accelerating shift to electronic payments will enrich the world’s largest processor of credit and debit cards.

After being priced above expectations at $44 a share in an initial public offering that raised nearly $18 billion, Visa shares soared $12.50 to close at $56.50, a gain of 28.4 percent. The run-up gives the San Francisco-based company a market value of about $50 billion.

The fervor reflects investors’ view that Visa is in a lucrative position as more people rely on its electronic network to make payments instead of using cash and checks. Visa is expected to milk the phenomenon to become an even bigger cash cow than it already is.

Visa generated $5.2 billion in annual revenue last year as it handled more than 44 billion transactions totaling more than $3.2 trillion. The volume puts Visa far ahead of its main rival MasterCard, whose own shares have more than quintupled from their May 2006 IPO price of $39. Mastercard shares finished the day at $208.39, down $1.86.

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 past 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 staples like groceries, gas and even utility bills. Visa estimates about 42 percent of its transactions fall into this “nondiscretionary” category, up from 27 percent in 2000.

“Visa enjoys one of the widest economic moats that a company can desire,” Morningstar analyst Michael Kon wrote in a research note today.

Reflecting management’s confidence, Visa anticipates earnings growth of at least 20 percent for at least the next two years. The company got off to a fast start in its fiscal first quarter ending in December with a $424 million profit, up 70 percent from the previous year.

Visa overcame turbulent market conditions to shatter the previous U.S. record IPO of $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

Investment bankers could still exercise an option to buy another 40.6 million Visa shares during the next 30 days. If that happens, Visa’s IPO will end up raising $19.7 billion before expenses.

Visa has earmarked more than $10 billion of the IPO proceeds to buy back shares from the banks that helped build up its network over the past 50 years. The biggest chunk, about $1.25 billion, will be paid to its largest customer and shareholder, JPMorgan Chase.

The windfall comes a propitious time, given the banking industry’s wobbly condition as billions of losses pile up from the housing market’s worst downturn since the 1930s.

Another $3 billion from the IPO is being deposited into an escrow account to cover potential liabilities in lawsuits alleging Visa conspired to stifle competition and fix prices.

Those legal problems represent one of the biggest risks to owning Visa stock, although the company’s management maintains the escrow account and contingency measures should adequately protect investors. Visa paid more than $2 billion late last year to resolve a suit with American Express, but a similar case brought by Discover Financial Services is scheduled for a Sept. 9 trial in New York.

Visa’s dependence on only a handful of banks that issue most of its cards poses another possible downside, said Aite Group analyst Gwenn Bezard. The company’s five largest customers accounted for $1.2 billion, or 23 percent, of its revenue last year.

Big card issuers like JPMorgan already get special discounts and the pricing pressure on Visa could intensify if more industry mergers further decrease the number of banks using its processing network, Bezard said. That might crimp Visa’s profits.

For now, Visa is planning to trim about $300 million in expenses during the next two years to boost its operating profit margin from 37 percent.

Menlow and other analysts don’t view Visa’s blockbuster IPO as a sign that jittery investors have suddenly become more interested in taking chances on companies going public for the first time.

“This is more like an oasis in the desert,” Menlow said.

The arid conditions have produced just 22 IPOs far this year, down from 47 at the same juncture in 2007.