Monitise's share price is tanking today, after Visa Inc said it was looking at options to reduce its stake in the business.
Shares in the British tech business had fallen more than 35 per cent at pixel time, wiping hundreds of pounds off its market value and making it the biggest single loser on the London Stock Exchange so far today.
It followed an announcement by Visa Inc that it had hired JPMorgan Securities to investigate options around its 5.5 per cent stake in the business.
Visa Inc is the fourth largest shareholder in Monitise, and first took a stake in 2009 when the company's revenues were around £3m – a fraction of the £95.1m it took in the year to June 30.
At its peak, Visa Inc owned 14.4 per cent.
Visa Inc said today:
Given the maturation of Monitise as a company, Visa is considering its options with respect to the investment and has engaged J.P. Morgan Securities Plc to assist. Visa will also be lessening its dependence on external mobile development resources.
This reduction in ownership and associated influence is consistent with Visa's investment practice to seed emerging players and, over time, taper that influence as the partner company grows.
Bill Sheedy, executive vice president of corporate strategy at Visa Inc said: "Visa has benefited substantially from our relationship with and financial investment in Monitise".
He added: "Visa invested in Monitise as an early thought leader with a vision of making mobile banking mainstream and extending that functionality to mobile payments."
It's not yet clear whether Visa Europe, which owns a separate stake in the business, will follow suit.
Monitise has since issued a statement saying it “continues its alliance with Visa Inc” and reiterated its guidance for the current financial year.
Monitise chief executive and founder Alastair Lukies said:
"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."
So is the share price drop an over-reaction? Not according to Berenberg analyst Ali Farid Khwaja, who argues there are now "serious questions about the sustainability of Monitise's business model".
He adds: "The decision by Visa to move away from Monitise after working together since 2009 raises concerns about other long-term contracts that Monitise has with customers such as Visa Europe, FIS and RBS. If Visa chooses to develop expertise in house, why wouldn’t the others?
"Monitise is a concept stock and hence the credibility of the management and the investment proposition is critical to gain investor trust. Berenberg believes that this trust has been hurt by the two profit warnings this year, and again by Visa’s actions."