Visa (NYSE:V) shares fell nearly 1.5% in premarket trading on Thursday after the financial services company initiated a process to enable the largest U.S. banks to sell their shares in the world's largest payments network.
This move has garnered mixed reactions from Wall Street analysts.
Jefferies anticipates that the proposal may create a near-term overhang on Visa's stock, potentially causing some investor concerns.
On the other hand, Morgan Stanley sees the proposal as a potential means to alleviate certain pressures.
“The exchange would reduce the overhang related to the uncertainty of when and how Class B shares eventually become converted and publicly tradeable float,” Morgan Stanley analysts wrote in a client note.
Visa's plan involves initiating discussions with investors to amend the share structure that has been in place since before its initial public offering (IPO) in 2008.
If approved, this proposal would grant holders of Visa's Class B shares, including major U.S. banks like JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Bank of America (NYSE:BAC), the ability to sell up to half of their stakes initially.
Wells Fargo analysts also believe that the potential exchange offer “creates near-term share overhang.”
“The proposed offer would enable ~9% of Visa's market cap to come to market over a period of 90+ days, but it reduces the potential for a larger one-time overhang event. This could benefit banks that are sitting on large unrealized gains on V shares,” they wrote.