Feb. 25 (Bloomberg) -- Visa Inc. may raise as much as $17 billion in what would be the biggest U.S. initial public offering as the largest credit-card network tries to replicate the success of MasterCard Inc.

Visa plans to sell 406 million Class A shares for $37 to $42 each, the San Francisco-based company said in a regulatory filing today. Banks have the option of selling an additional 40.6 million shares, pushing the size of the deal to $18.8 billion.

The IPO would eclipse AT&T Wireless Group's $10.6 billion stock offering in 2000. Visa is pursuing its share sale as consumers turn from cash to credit cards and debit cards for a majority of their purchases. MasterCard has surged more than fivefold in New York trading since its IPO almost two years ago.

``People might argue that it's growing faster than MasterCard in terms of transactions,'' said Paul Bard, an analyst at Renaissance Capital in Greenwich, Connecticut. Investors ``might look to pay a slight premium to MasterCard.''

The offering could leave Visa with a stock market value of more than $32 billion, which would be comparable to MasterCard's current value of about $26 billion, Bard said. The pricing of Visa's shares looks ``very similar to where MasterCard is'' trading, at about 27 times 2008 earnings, he said.

Paying on Credit

Visa Chief Executive Officer Joseph Saunders is pressing ahead with the sale amid a slump in the IPO market. Demand for initial public offerings has waned this year, with 100 companies raising $12 billion, 43 percent less than in the same period last year, according to data compiled by Bloomberg.

Revenue at Visa and MasterCard has climbed as consumers pay for more purchases with credit and debit cards, instead of cash. Cards will be used for 55 percent of all U.S. transactions by 2011, up from 40 percent in 2005, according to the Nilson Report, an industry newsletter based in Carpinteria, California.

The companies are insulated from rising defaults and late payments because, unlike American Express Co. and Discover Financial Services, they don't extend credit to cardholders. The banks that issue the cards take the credit risk.

MasterCard is up 44 percent in New York trading in the past six months, compared with a 25 percent drop at American Express and Discover's 35 percent decline.

The ``MasterCard factor'' will help Visa overcome slumping demand for IPOs, said David Menlow, who tracks the market as president of Millburn, New Jersey-based IPOFinancial.com. The jump in MasterCard shares ``is a sore point for many IPO investors who missed it.''

American Express Suit

Visa said earlier this month that profit doubled to $424 million in the quarter ended Dec. 31. Revenue surged 76 percent to $1.49 billion.

MasterCard's fourth-quarter net income climbed sevenfold to $304.2 million. The Purchase, New York-based company has exceeded analysts' profit estimates every quarter since going public.

At the high end of the projected range, Visa's transaction would be the world's second-biggest IPO, after the $22 billion raised by Industrial & Commercial Bank of China Ltd. in 2006.

Visa reached an agreement on Nov. 7 to settle a 2004 antitrust suit brought by American Express, removing an obstacle to the share sale.

Some of the proceeds from the offering will be used to settle lawsuits including the one with American Express, the company said in its filing. The rest will be used to buy stock from Visa's member companies and to run the business.

Payments to Members

Visa plans to place $3 billion into an account to cover the settlements, today's filing said. Another $10.2 billion in proceeds will be used to buy Class B and Class C shares, which are held by Visa's members, including JPMorgan Chase & Co. and Bank of America Corp. Class C shares are held by Visa Europe.

JPMorgan could have a $2.55 billion equity stake based on the midpoint of the IPO range, Bear Stearns & Cos. analyst David Hilder wrote in a research note today. Bank of America's holdings are potentially worth $1.26 billion, while Cleveland-based National City Corp.'s are worth about $880 million.

``It is clear that the expected equity interest in Visa from the IPO will more than offset the previously recognized Visa- related charges,'' Hilder wrote.

Fifteen banks are arranging Visa's share sale, led by JPMorgan and Goldman Sachs Group Inc. Others include Bank of America and Citigroup Inc. The stock will list on the New York Stock Exchange under the ticker V.

The date of the offering wasn't disclosed in the filing.

To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net.

Last Updated: February 25, 2008 16:11 EST