ASX blocks Guvera float

The music streaming service’s $1.4bn float has been rebuffed following weeks of controversy.

Guvera CEO Darren Herft at his Robina HQ. Picture: Luke Marsden.

The ASX has blocked Australian music streaming service Guvera’s $1.4 billion IPO following weeks of controversy and questions over its valuation.

An ASX spokesman confirmed the move in a statement to The Australian.

“ASX has exercised its discretion to refuse admission, based on material contained in Guvera’s application for admission. Specific reasons remain confidential,” an ASX spokesman said.

“ASX has an absolute discretion to decide whether or not to admit a company to the official list and to quote its securities.

“ASX must be satisfied that a company is appropriate to be listed on ASX and can exercise its discretion to refuse admission even where a company otherwise satisfies all of the specific conditions for admission.

“In exercising its discretion, ASX takes into account the 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.”

Meanwhile, Guvera said it is reveiewing its legal options and obligations, and will be communicating to the market when it is “more informed about the position and course of action the company can take.”

The ASX block comes despite Guvera’s revised prospectus receiving approval from the corporate regulator ASIC this week.

The Gold Coast-based streaming service faced sustained criticism in past weeks after showing little in the way of assets and notching up heavy losses. It was looking to raise between $50 million and $80m.

Its prospectus said if it were to secures this much from investors Guvera would carry a market capitalisation of $1.453 billion, a figure ridiculed by industry experts.

Australian Shareholders’ Association director Geoffrey Bowd issued a warning last week, saying “It is really concerning that a loss-making company which expects operating losses and negative operating cash flow to continue into the future may list on the ASX, particularly where its ongoing viability is dependent on the proceeds from the IPO.”

According to the prospectus, Guvera posted a loss of $55.7m for the first half of 2016 and losses for the first nine months of financial 2016 of about $80m.

At the end of last year, the company had a negative asset position of $27.4m.

Guvera has been contacted for comment.