Monitise update - placing is on the cards

When I first wrote about this one a while back I made the point that it wasn't one for widows and orphans, today perhaps shows why. The company announced to the market that it is looking to raise £100 million extra capital, it would seem to expand. The statement was full of positives, but the market seems to have taken a dislike to the news falling around 9% so far. Monitise investors might live with that had it not been for the fact that it has already fallen from a recent high of almost 40p to around 33p before today's news. Looks now that it may well fall below the 30p mark.

Mobile banking technology firm Monitise has admitted it is in discussion to raise up 100m pounds. 

The company said it was talking to Canaccord Genuity and certain institutional and strategic investors "to take advantage of significant opportunities represented by mobile banking, payments and commerce". 

Proceeds from the proposed placing would be used to fund new Mobile Money products for financial institutions and payments companies, the firm said, particularly in terms of mobile commerce capabilities. 

The announcement was forced by press speculation into Monitise's plans to raise money. 

Chief Executive Alastair Lukies said the business was seeing enormous demand for Mobile Money services. 

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=233171&action=news&story_id=20531938

The trading update was also impressive in terms of potential;

Current Trading Update

·    Group revenue on track to reach at least $110m in FY2013.

·    Payments and transfers processed by Monitise now over $25bn annually, versus $1bn a year ago.

·    More than 18m customers now registered to Monitise Mobile Money services, compared with 5.5m in December 2011.

·    The group has a pipeline of more than 100 financial institutions via its partners and direct sales teams looking to adopt mobile banking, payments and commerce applications developed by Monitise.

·   Further to the recently announced global alliance with information technology business Cognizant, Monitise is also in talks with a number of major technology businesses interested in partnering with Monitise, reselling the Group's banking, payments and commerce solutions and collaborating on mobile technology innovations.

·    An application to move from AIM to the London Stock Exchange's main market for listed securities is under consideration for calendar 2013.

  

Monitise plc Group Chief Executive Alastair Lukies said: "Our business is seeing enormous demand for Mobile Money services. The breadth of companies interested in working with us has never been greater and the level of consumer engagement with Mobile Money services we have developed is hitting new highs.  The value of payments and transfers alone handled by our commercially established technology platform is now surpassing $25bn on an annualised basis, compared with around $1bn a year ago."

http://www.digitallook.com/news/rns/20531714-233171/MONI-Statement_regarding_press_speculation_html

Despite the positive slant on today's story it wasn't enough to stop the share price nosedive. The thing about AIM stocks is that they can be very volatile, especially the growth story ones. Sooner or later the market wants to see the growth actually delivered and this is not the first time that the company has gone to the market for more cash. Even though the story looks a positive one today's market reaction suggests that they don't like the potential further dilution that raising another £100 million on a company valued at £344 million might bring.

There may still be a big story here and today's announcement might simply be a blip on the long road that leads to Monitise being worth much more than the current 30p or so in a few years time. However, no one should expect this road to be an easy one and it could wind up a dead end.