[UPDATE 3] international music streaming service Guvera has been hemorrhaging cash; and its best, though risky, hope was to go to the public markets. that plan was dashed, after an rare rejection ASX, the Australian version of the US Securities and Exchange Commission. Now the partied have agreed to meet.
In an almost unprecedented move, the Australian Securities Exchange (ASX) has rejected a $75 million IPO by international music streamer Guvera just one day after its was approved by the Australian Securities and Investments Commission. “We write to advise that the ASX has exercised its discretion to refuse the applicant (Guvera) admission to the official list,” AXS officials informed Guvera on Friday.
Guvera has about 14 million users globally, of which 7 million are in India.
The IPO, announced earlier this month, was designed to raise $50 to $100 million AU ($38-$75 million USD) at a valuation of $1.3 billion AU. But analysts hit the panic button after filings showed Guvera had just $1.2 million AU in revenue in fiscal year 2015 with a net loss of $81.1 million AU. That loss was up from a $29 million AU the year before. Guvera also owes lenders $14.5 million AU and has been rumored to owe music companies millions more.
UPDATE - Guvera posted this message: "The ASX has confirmed a meeting with Guvera on Tuesday 21 June 2016 to discuss this decision."
Music streamer Deezer pulled its own planned IPO earlier this year after analysts questioned the financial viability of the company. Recent hiring has led to speculation that market leader Spotify is readying its own IPO for later this year.
Some in the Australian financial press are questioning how the country can finance future tech ventures if its stock exchange limits investor choice, as it has with the Guvera rejection. "The ASX is making itself the judge and jury in relation to risky, high-tech business models," according to the Financial Review. "There have been many loss-making companies that have listed on the ASX in the past and gone on to great heights."
But Guvera's money problems are far more immediate; and its options very limited. Several analysts see liquidation as the only path available.