Some Credit Lawsuits For MasterCard IPO

MasterCard’s initial public offering, today on the New York Stock Exchange, may have been driven in part by the credit card company’s desire to raise cash for litigation against it. The Associated Press reports that the company, which is owned by the more than 1,400 financial institutions that issue its cards, may raise $2.6 billion (contrast that to the $1.7 billion Google took in on the first day of its IPO), about $650 million of which would be put aside to handle the numerous lawsuits against it. The court battles are over interchange fees that MasterCard and Visa International charge, which merchant groups claim is unlawful price-fixing. According to the AP, the day before the IPO, MasterCard, in a Securities and Exchange Commission filing, said it had a $500,000 legal reserve for charge-back lawsuit. Observers don’t think the lawsuits will discourage investors, who will have the opportunity to grab a total of 46% of MasterCard. “I’m kind of happy they have some litigation,” Ryan Batchelor of Morningstar told the AP, “because if they didn’t, they wouldn’t be going public and none of us would have the chance to buy an excellent firm in a really robust IPO market.”