Table of Contents
Executive Summary .................................................................6
What Is the New Normal? A Closer Look at What the Future
May Hold .................................................................................11
Question 1: Who wins once competition emerges? VisaNet or Redecard? ...............14
Question 2: Will new entrants be a threat to the existing duopoly?...........................20
Question 3: Will price competition be rational? ........................................................21
Question 4: How will distribution and relationship models evolve? .........................21
Question 5: What will the POS rental business look like in the future? ....................22
Question 6: Will the prepayments of receivables business disappear? ......................27
Question 7: Will regulatory pressures remain?..........................................................29
Secular Growth Story.............................................................30
Growth Drivers ..........................................................................................................30
Regulatory Environment........................................................34
Legislative Proposals .................................................................................................35
Central Bank Report and Process...............................................................................36
The ABECS Response ...............................................................................................41
Next Steps..................................................................................................................42
Recent Developments ................................................................................................43
Tale of the Tape: VisaNet vs. Redecard – A Closer Look at
the Numbers ...........................................................................44
Five Key Differences .................................................................................................46
Earnings and Profitability Drivers.........................................51
Key Assumptions and Conclusions............................................................................51
Revenue Sensitivity Analysis ....................................................................................59
Valuation Analysis and Price Target Calculations ..............61
Multiples Comparison................................................................................................61
Discounted Cash Flows Model (DCF).......................................................................65
VisaNet versus Redecard ...........................................................................................65
VisaNet ....................................................................................67
Key Investment Points ...............................................................................................67
Investment Risks........................................................................................................70
Earnings Drivers and Sensitivity Analysis.................................................................71
Valuation and Price Target ........................................................................................72
Company Description ................................................................................................74
Redecard.................................................................................78
Key Investment Points ...............................................................................................78
Investment Risks........................................................................................................80
Earnings Drivers and Sensitivity Analysis.................................................................83
Valuation and Price Target ........................................................................................84
Company Description ................................................................................................85
Appendices
Appendix I: Payment Ecosystem ..........................................89
Appendix II: Glossary.............................................................91
Appendix III: Unique Features of the Brazilian Payments
Industry ...................................................................................92
Appendix IV: Summary Financial Models ............................96
Note: Pricing on the cover is as of the close on August 10, 2009. All other pricing in
this report is as of the closes on August 7, 2009, unless otherwise indicated