Executives from the music streaming service Guvera will hold crunch talks with representatives from the Australian Securities Exchange (ASX) on Tuesday to discuss why its proposed float was rejected by the market operator.
In a surprise move, the ASX blocked Guvera's proposed AU$100 million initial public offering (IPO) on Friday, less than 24 hours after the Australian Securities and Investments Commission approved a revised prospectus.
The ASX said it has "exercised its discretion" to refuse admission to Guvera, based on material contained in Guvera's application for admission.
Specific reasons remain confidential, according to the ASX, but Guvera has said it is reviewing its legal options and obligations following the decision.
The company had expected to make its ASX debut mid-July, with a market value of about AU$588 million.
The ASX said that, in exercising its discretion, it takes into account principles on which the listing rules are based, which serve the interests of companies and investors in maintaining the reputation of the ASX market.
"These principles include that an entity should satisfy appropriate minimum standards of quality, size and operations and disclose sufficient information about itself before it is admitted to the official list," ASX said.
The ASX is still listing the music streaming service on its website under upcoming listings, however.
Guvera, headquartered in the Gold Coast and founded in 2008 through investor funding, was looking to sell 80 million shares at AU$1.00 a share, with an option to issue a further 20 million shares if demand is strong. The share offer does not include approximately 635 million shares which are subject to escrow arrangements.
The company said it has its sights firmly set on the global music market and is strategically focused on high-growth, emerging countries including India and Indonesia.
The platform currently has over 14 million users across 10 countries. About half of Guvera's users are based in India, where the company claims to be the first international streaming platform to enter the digital music market.
India has the fastest growing mobile advertising volumes in the world, giving the company plenty of scope to increase revenue, according to Guvera.
Guvera's revenue comes primarily from advertisers, as its main product is a free music service that includes targeted branded content.
"Guvera's revenue model replicates that of major social media platforms based on mobile digital advertising," Phil Quartararo, Guvera chairman and former CEO at Virgin Records, Warner Bros Records, and EMI, said.
"The provision of music is a mass-market service, and I believe Guvera's brand-funded business model helps position the music company to take advantage of this mobile advertising explosion."
Guvera's platform is available on iPhone, iPad, Android, Windows, and Amazon devices.
Guvera teamed up with telecommunications provider Virgin Mobile in October to give Virgin customers access to the music streaming service without draining their data.
The company's CEO Darren Herft said the partnership with Virgin would improve Guvera's position in the highly competitive Australian streaming services market.
"Guvera's partnership with Virgin gives us access to a highly engaged audience of music lovers, ultimately boosting our member base and continuing our momentum in the Australian market," Herft said at the time.
"Guvera now has over 15 million global users, and partnerships such as this play an important part in building awareness of what we can offer, both in terms of a quality listening experience and an innovative platform for brands to advertise.
"This partnership exemplifies what Guvera can do in partnership with the telecommunications industry, and we are excited about introducing this model to the more than 20 overseas markets that we operate in."
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