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Guvera into voluntary administration!

Jun 30, 2016 | Team Kalkine
Guvera into voluntary administration!

 
It was only recent that we covered about Guvera, the music streaming company’s efforts towards listing on ASX. The company was already having the clouds of speculations hovering over but rejection by ASX on listing of the company has come as a blow to Guvera. The highlights are given below:
 
  • Guvera’s fundamentals and IPO update: Guvera was planning for ASX listing by floating an IPO to raise funds up to $100 million. The business was valued at $1.3 billion. The company earned revenue of $1.2 billion and has reported a loss of $81 million in FY15 while for first six months of 2016, it reported a loss of $55.7 million. The company’s financial condition is said to be very critical. The management clearly warned investor in its prospectus that the future running of business depends only on IPO funding and failure of IPO would lead the business into critical situation.
 
  • ASX blocked the float on exchange: ASX has put a restriction on the group for ASX listing. ASX did not reveal the reason of blocking the float and maintains confidentiality while stating that it has “absolute discretion” to not admit a company to the exchange based on certain principles dealing with satisfying appropriate minimum standards of quality, size and operations and disclosing sufficient information. Post restriction from ASX, Guvera has announced that its two subsidiaries - Guvera Australia Pty Ltd and Guv Services Pty Ltd – which deal in international market have gone into administration. Moreover, the recent slight discrepancies from the group’s prospectus have also raised few concerns. Firstly, the February 2016 release quoted Guvera has 15.9 million users in 20 countries while the prospectus says Guvera has more than 14 million registered users in 10 countries. Then there are the legal issues with float proceeds reportedly said to be used to settle outstanding debts. The intended IPO was also widely hammered by the tech industry leaders questioning the steep valuation for a company that made revenues of just $1.2 million with loss of $ 81 million. Guvera have appointed Deloitte to lead a restructure and would work closely with Deloitte to provide financial assistance for creditors.
 
  • Slicing of target markets’ operations: The company has reduced the number of markets where it operates by half in an attempt to address the IPO rejection in terms of operations. As per the latest updates, Guvera’s markets of focus will include India, Indonesia, the Philippines, the UAE, Vietnam and Australia.
 
Guvera’s Business Highlights
 
  • Focus on home and emerging markets: Guvera would continue to focus its home market of Australia and would face stiff competition from streaming giants, Spotify and Pandora. Going forward the focus would be on the expansion in high growth emerging markets of India, Indonesia and United Arab Emirates (UAE). On later stage it would like to test Philippines and Vietnam market.
 
  • Business model: Guvera’s model is to broadcast ads to listeners, with advertisers effectively paying for the music. It has highly scalable platform that caters to brands as much as it does for music lovers, artists and right holders. The focus is on digital mobile advertisement spends, and with the growing number of smartphone usages, the opportunity is quite big.
 
  • Competitive advantages: Guvera is positioning itself to leverage the advantages of the digital mobile advertising explosion.The management (in its release dated February 2016) reported that the company has licensed global music rights to provide users with free access to music sponsored brands, enabling brands to set up their very own music channel on Guvera. Coke, McDonald's, Harley-Davidson, AMEX, Goodlife, Cornetto, KFC and others can all set up their very own music channels on Guvera. This is the major competitive edge to Guvera. Guvera has also patented the algorithms that match a brand to a demographically targeted consumer. The group owns the process where there is an exchange of a music file for free, sponsored by the brand. Guvera owns this space with music and already has the relevant patents. The group offers consumers non-disruptive advertising access to music, with no ads enabling them to enjoy the whole music experience. Guvera has spent years licensing these rights with innumerable music labels and publishers globally. And by making the service free, non-disruptive yet highly engaging for brands, Guvera has seen significant increase in user growth, retention and activation rates in 2015.
 

 
40 brands said to make highly engaging Brand Channels via Guvera (Source: Company reports)

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