Visa Inc. took a significant stake in mobile-payments company Square Inc. prior to its initial public offering, according to a regulatory filing Thursday with the Securities and Exchange Commission.
The global credit-card and financial-services firm acquired some 4.19 million Class B shares in 2011 that do not publicly trade. It has the right to convert 3.52 million of them to Class A shares, the filing by Square said.
If it were to do so, Visa would have a 10 percent stake in the company, smaller only than the 12.4 percent stake now held by Capital Research and Management Co., the huge mutual-fund company based in Los Angeles, according to financial data provider FactSet.
Square makes a plastic device that allows mobile phones to accept credit-card payments. It generates the vast majority of its revenue from retailers, restaurants and other businesses that pay the company a fee to process payments.
Mobile financial transactions are a fast-growing business, but concerns over worldwide economic growth and the valuations of tech companies have cut into stock valuations.
Prior to its IPO, Square reported that its losses rose to $154 million in 2014 on $850 million in revenue. In 2013, its losses totaled $105 million on $552 million in revenue.
Square is headed by Jack Dorsey, who also serves as Twitter Inc.’s chief executive.