Crackdown Looms For Small Tech Floats In Wake Of Guvera Affair
The Australian Shareholders’ Association has issued a statement warning investors off the controversial float of Queensland-based music streaming service Guvera.
The warning comes as the ASX and the Australian Securities and Investment Commission (ASIC) consider plans to crackdown on what has become a plethora of sharemarket floats by small technology companies with limited funds, inexperienced management and a background of losses.
The planned Guvera float seeks to raise $100 million, valuing the company – which last year reported a loss of $81 million on net income of $1.2 million – and in the first nine months of FY2016 has lost another $80 million – at $1.3 billion.
If the $100 million is raised, founder Claes Loberg, pictured, would be entitled to shares valued at up to $144 million, with another $98 million in shares going to CEO Darren Herft.
The Australian Shareholders’ Association says it is concerned 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 (float) proceeds”.