Sweden’s Seamless is planning a private placement for its loss-making SEQR subsidiary, which it claims is Europe’s most used mobile payments solution in stores and online.
The firm has asked its advisers to look for outside investors for SEQR, with the aim of reducing dilution for existing shareholders while providing funds to drive the growth of the mobile payment unit.
The idea of raising outside finance for SEQR is that current shareholders of Seamless will not see their ownership of profitable Seamless group companies diluted. The latter businesses, Transaction Switch and Distribution, make about SEK40 million ($4.6 million) in profits on an annualised basis.
SEQR enables smartphone users to make payments at the point of sale in locations such as shops and restaurants, as well as online. In addition users can transfer money and connect to loyalty programmes. It has a presence in eleven European countries, as well as the US.
However, SEQR’s presence has not yet translated into revenue and profit. In April-June 2015, Seamless reported SEK70.4 million in net sales and an operating loss of SEK24.4 million. The SEQR unit reported revenue of SEK1.8 million and made an operating loss of SEK35.5 million.
“We are evaluating alternatives to fund the growth of SEQR to reduce the burden on our public shareholders, and to highlight the hidden value of SEQR, by bringing in the right long term partners for SEQR,” said CEO Peter Fredell.
“We want Seamless’ shareholders to benefit from continuing ownership of a profitable company, as well as continued equity participation in SEQR. Furthermore it is advantageous for our current shareholders to obtain an implicit market value of SEQR,” he added.