June 26 (Bloomberg) -- Visa Inc.’s Brazilian affiliate is raising 8.4 billion reais ($4.3 billion) in the world’s biggest initial public offering in more than a year as investors bet on credit card growth in Latin America’s largest economy.

Shareholders of Cia. Brasileira de Meios de Pagamentos, the Sao Paulo-based processor of payments for the largest credit card network, are selling 559.8 million voting shares at 15 reais each, according to the Brazilian securities regulator. The sale includes a possible supplemental offering, or “over- allotment.”

Demand for the IPO was “intense,” signaling the shares may jump when they begin trading on June 29, said Augusto Lange, who helps manage 650 million reais at Neo Gestao de Recursos in Sao Paulo. The company, known as VisaNet, is attracting investors on prospects that more Brazilians will use credit cards as the economy rebounds and consumption grows, he said.

“All the indications are that the shares will go up,” said Lange. “This is a story closely connected to Brazilian economic development, local consumption and growth in per capita income. There isn’t any other stock in the market that can put together all these elements.”

The IPO is a record in Brazil. A complete sale of the over- allotment will make it the biggest in the world since San Francisco-based Visa, the owner of 10 percent of the Brazilian affiliate, raised $17.9 billion in March 2008.

‘Huge’ Potential

“If you think about the Brazilian people who don’t use bank services, the growth potential is huge,” said Alcindo Costa Canto Neto, who manages 3.5 billion reais at HSBC Holdings Plc.’s asset management unit in Sao Paulo. “With VisaNet you are buying at the root of this activity.”

Brazil’s credit card market expanded 22 percent in 2008 and about 20 percent every year since 1995, after the government introduced a new currency to help bring down inflation from 5,000 percent a year, according to Itau Unibanco Holding SA, the nation’s largest bank. The industry will keep expanding as Brazilian consumer spending rises, said Luis Miguel Santacreu, an analyst at Austin Rating in Sao Paulo.

“As the economy grows people consume more and they will use their cards more as a way to pay it,” Santacreu said. “The plastic came to stay in Brazil. The trend is that it will be used more and more.”

Increased Consumption

Card payments account for 22 percent of Brazil’s private sector consumption, compared with 40 percent in developed countries, according to Federico Rey-Marino, a Buenos Aires- based analyst with Raymond James & Associates Inc. He estimates card volumes will grow 16 percent annually over the next 5 years, reaching 29 percent of consumption.

“Brazil is one of the countries that presents strongest growth potential based on the low participation of electronic payments versus cash or checks,” Rey-Marino wrote in a report.

Lower interest rates will also boost credit card use, said Lange. Brazilian policy makers have cut the benchmark lending rate to a record low 9.25 percent to help pull the economy out of its first recession since 2003. The $1.3 trillion economy is expected to shrink 0.6 percent this year and expand 3.5 percent in 2010, according to a central bank survey of 100 analysts.

Prospects of domestic growth and the credit card industry’s “resilience” spurred investors to pile into the shares, said Daniella Marques, who helps manage about 2 billion reais at Mercatto Investimentos in Rio de Janeiro.

‘Very Strong’

“The demand was very strong, eight times higher than the offer,” she said. “Investors who have a mid to long-term view will have to buy the shares in the market when they start trading.”

Felipe Casotti, a fund manager at Maxima Asset Management in Rio, predicted an “impressive gain” for the stock.

“There’s very few consumer stocks that are so liquid with such a big market cap,” said Casotti, who helps oversee the equivalent of $245 million. “It’s going to be important for the market as a whole.”

Redecard SA, the Brazilian processor of payments for Mastercard Inc., jumped to the highest price in more than a year in Sao Paulo trading, adding 3.5 percent to 32.40 reais.

VisaNet planned to sell 477.7 million shares, with the option to sell an additional 71.65 million for the over- allotment and another 95.5 million if the investors decided to sell more, according to the prospectus.

Additional Shares

The investors selling include Visa; Osasco, Brazil-based Banco Bradesco SA; the Brazilian unit of Santander, Spain-based Banco Santander SA; and Brasilia-based Banco do Brasil SA.

VisaNet will likely announce in the next few days that it sold all of the roughly 645 million shares “given such strong demand,” said Eduardo Roche, who helps manage the equivalent of $389 million at Banco Modal SA in Rio de Janeiro.

Bids for the offer were extended to 4 p.m. in Sao Paulo yesterday from a previous June 24 deadline after 19 brokerages were banned from participating in the sale. VisaNet said the brokerages were excluded because they “supposedly” advertised the offering without regulatory approval.

Brazil will start an investigation of the alleged irregularities in the IPO, which may result in fines and other penalties for the brokerages involved, Felipe Claret da Mota, director of securities registration for the regulator, said in an interview.

Brazil Record

VisaNet surpassed OGX Petroleo & Gas Participacoes SA, which raised 6.7 billion reais in June 2008, as Brazil’s biggest new listing. It’s also the first IPO in the country since Rio- based OGX’s sale.

The number of new share sales slid to four last year from 64 in 2007 as the deepening financial crisis spurred the first global recession since World War II and sent the Bovespa plunging a record 41 percent. The index has rallied 37 percent this year on speculation record low interest rates and a rebound in demand for the country’s commodity exports will fuel growth.

Almost 90 percent of the shares listed in Brazil since the beginning of 2007 trade below their offering price, according to Bloomberg data.

“Investors are more selective,” Denise Pavarina, a director at Bradesco’s investment banking arm, told reporters at an event in Sao Paulo on June 22. “When there’s a large offering, then investors will look at it.”

To contact the reporters on this story: Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net

Last Updated: June 26, 2009 16:42 EDT