June 22 (Bloomberg) -- Visa Inc.’s Brazilian affiliate plans to sell stock in the world’s biggest initial share sale in a year, seeking to tap investor demand in a nation where credit card use is growing more than 20 percent annually.

Shareholders of Cia. Brasileira de Meios de Pagamentos, the Sao Paulo-based processor of payments for the largest credit card network, aim to raise 5.7 billion reais to 7.2 billion reais ($2.9 billion to $3.6 billion) in the June 25 sale. The offering would be the largest since OGX Petroleo & Gas Participacoes SA raised 6.7 billion reais in June 2008, or the equivalent of $4.1 billion at the time, and could set a record in Brazil if investors buy at the upper end of the price range.

“The chance of this being a record is very good,” said Clecius Peixoto, who helps manage $11 billion in emerging-market stocks for Emerging Markets Management LLC in Arlington, Virginia. “This deal incorporates several things that investors are looking for -- it offers exposure to Brazil, and has an extremely powerful theme, which is the prospect of greater use of cards.”

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 pegged to the dollar to bring down inflation from 5,000 percent a year, according to data compiled by Itau Unibanco Holding SA, the nation’s largest bank. Record- low interest rates may keep demand growing as Brazil’s economy pulls out of its first recession since 2003, said Carlos Camacho of GAP Asset Management in Rio de Janeiro.

Stock Rally

As many as 31 global equity offerings may be completed this week, including nine initial offerings, according to Bloomberg data. Perdigao SA, Brazil’s biggest food company, today filed a request with Brazil’s securities regulator to sell an undisclosed number of new voting shares.

VisaNet, as the payment-processing company is known, is selling shares as Brazil’s Bovespa stock index is headed for its best quarterly gain since October to December of 2006. The index is up 21 percent this quarter and 32 percent for the year after tumbling a record 41 percent in 2008.

San Francisco-based Visa, which owns 10 percent of VisaNet, raised $17.9 billion in its March 2008 initial public offering, a U.S. record. VisaNet’s offering of up to 477.7 million shares probably will price at the high end of the 12 reais to 15 reais range because of prospects Brazil’s credit card market, with 224 billion reais in purchases, will keep expanding, Camacho said.

IPO Drought

“The use of credit cards is directly linked to the consumption, and the prospect for the consumer market in Brazil is very good,” said Camacho, who helps manage 3 billion reais and is seeking to buy VisaNet shares in the IPO. “From what we are hearing in the market demand for this stock is very hot.”

Clients who in previous IPOs set aside 30,000 reais to buy shares are reserving 100,000 reais for the VisaNet deal, said Renato Bandeira de Mello, operations manager at Futura Corretora in Sao Paulo.

The IPO is the first in Brazil since Rio de Janeiro-based OGX’s record offer. 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. The measure has rallied this year on speculation interest-rate cuts and increased commodity demand will fuel growth in Latin America’s biggest economy.

International investors poured 10.3 billion reais into the market this year as of June 16, according to exchange owner BM&FBovespa SA, including a record 6.08 billion reais in May.

Last Week’s Losses

The success of the VisaNet sale could spur other IPOs in the country this year, said Alberto Kiraly, a vice president at the National Investment Bank Association in Sao Paulo.

“We may see other IPOs in this same line of large transactions of more than 1 billion, 1.5 billion reais because it indicates a good liquidity level,” Kiraly said in a phone interview.

The price of the offering will depend on the performance of the stock market this week, said Guilherme Figueiredo, who helps oversee 1.5 billion reais as director of M Safra & Co. in Sao Paulo. The Bovespa fell 4.1 percent last week amid concern the nation’s share rally outpaced earnings growth prospects. The Bovespa index trades for 20.6 times reported earnings, almost double the weekly average of 11.5 times during the past five years, according to data compiled by Bloomberg.

Redecard Shares

Almost 90 percent of the shares listed in Brazil since the beginning of 2007 trade below their offering price, according to Bloomberg data. That may make investors more cautious on what price to pay, said Christopher Palmer, who helps manage $4 billion as chief of global emerging markets at Gartmore Investment Management Ltd. in London.

“The IPO market in the past few years was very uneven with regards to post deals trading,” Palmer said. “Even with a tremendous rally in some of the shares in recent weeks there are still very few Brazilian IPOs which are trading higher than when they went public.”

Redecard SA, the Sao Paulo-based processor of payments for New York-based MasterCard Inc., has gained 15 percent from its July 2007 offering price, compared with an 11 percent drop in the Bovespa index since the shares started trading.

“This is an attractive sector and the Redecard example is also favorable for the offering,” said Januario Hostin Jr., who oversees about 60 million reais at Leme Investimentos in Florianopolis, Brazil. He said he may take part in the IPO.

VisaNet’s other shareholders include Osasco, Brazil-based Banco Bradesco SA, Brazil’s second largest non-government bank, the Brazilian unit of Santander, Spain-based Banco Santander SA and Brasilia-based Banco do Brasil SA, the largest federally controlled lender.

Regulatory Concern

Brazilian regulators are seeking to force Redecard and VisaNet to sell assets to boost competition, Valor Economico reported last month, without saying where it got the information. The move would follow a central bank study in March that recommended changes to Brazil’s credit card market to make it more efficient and eliminate flaws in the system.

VisaNet said in an e-mailed statement that it can’t comment ahead of its IPO. Redecard said it has directed its comments to the Brazilian Association of Credit Card Companies, which will submit its opinion to the government after compiling companies’ views, according to an e-mailed statement.

“The only burden is the regulatory noise,” said Frederico Sampaio, who helps manage 660 million reais as head of equities for Franklin Templeton Investimentos Brasil’s Sao Paulo office. “The credit card business in Brazil is fantastic. If you look at fundamentals it’s unquestionable the quality of these companies.”

Markets

The Bovespa fell 2,184.46 points to 51,373.77 last week, led by Cosan SA Industria e Comercio, which sank 15 percent.

The real had the first weekly loss in a month, losing 2.5 percent to 1.9752 per U.S. dollar, from 1.9260 on June 12. The yield on Brazil’s benchmark zero-coupon local-currency bond due in January 2010 had a weekly decline of 10 basis points to 8.93 percent, the lowest in at least two years.

The following is a list of events in Brazil this week:

Event                                                  Date
CAGED Formal Job Creation May                          Jun 22-26
FGV Preview Inflation IGP-M                       Jun 23
FGV CPI IPC-S                                     Jun 23
FIPE CPI (Weekly)                                 Jun 24
IBGE Inflation IPCA-15 - June                     Jun 24
Current Account - May                                  Jun 24
FGV Consumer Confidence - June                         Jun 25
Unemployment Rate -  May                     Jun 25
Total Outstanding Loans - May                          Jun 25

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

Last Updated: June 22, 2009 16:32 EDT