Visa owns a disclosed figure of 5.5% in Monitise, initially investing inthe company in 2009 by taking a 14.4% stake when the company was a much smaller business. However, todays statement from Visa claims that this assessment is consistent with Visas investment practice to seed emerging players and, over time, taper that influence as the partner company grows.
Regardless of the outcome of the assessment, Monitise will continue its strategic alliance with Visa, though the latter has said it will be lessening its dependence on external mobile development resources. Visas Bill Sheedy commented:
Visa invested in Monitise as an early thought leader with a vision of making mobile banking mainstream and extending that functionality to mobile payments. Over the past 5 years, Monitise has successfully demonstrated its leadership in the sector underscored by the companys marquee clients, multiple network partnerships and recent agreement with IBM. Consistent with Visas increased investment in our in-house capabilities, and the substantial growth in Monitise, Visa is considering its options with regard to its Monitise stake.
Monitise management reiterated its unchanged previous guidance for the full year and longer-term guidance, which was unveiled last Friday, causing the shares to drop slightly despite impressive revenue results as investors were shaken by increasing losses year on year. Joint CEO and founderAlastair Lukies stated:
Visa Inc. has been a huge support in helping Monitise develop and grow into the worlds leading independent Mobile Money company. When Visa Inc. first invested we were a company of around 80 people with revenue of less than 3m and a primary focus on mobile banking. Today, Monitise is a global, agnostic and interoperable Mobile Money network of unique scale and capability. We are honoured to have our ongoing alliance with Visa as we continue to develop and expand our global network.
Todays news emphasises the importance of thoroughly researching an investment to know what youre getting yourself into: savvy shareholders will have seen that Visa has been gradually reducing its investment over the last five years as Monitise has grown.
Whether you believethis is a short term blip for Monitise and represents a buying opportunity is down to you. But if you’re looking for a growth share with excellent prospects AND pays a dividend, then you really need to read our latest specialFREEreport, “The Motley Fool’s Top Growth Share For 2014“.
Sam Robson owns shares of Monitise. The Motley Fool UK owns shares of Monitise. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.