Shares in Monitise plummeted 28 per cent in early trade as Visa announced an ‘assessment’ of its 5.5 per cent stake in the company. Visa is planning to reduce its dependence on external resources for the development of its mobile payments services.
Regardless of the outcome of the assessment, Monitise will continue to provide Visa with mobile platform development services through 2016. As both Visa and the payments industry evolve at a rapid pace, Visa intends to continue increasing its investment in its own in-house capabilities and, as a result, reducing its use of external resources.
In 2009 Visa, in conjunction with its commercial partnership, Visa invested in Monitise as a 14.4% owner of the company in order to provide capital support to a leader in the evolution of the mobile payments sector. Over time, Visa’s holdings have been reduced to its current 5.5% stake in the company. 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.
“Visa has benefited substantially from our relationship with and financial investment in Monitise,” said Bill Sheedy, EVP of Corporate Strategy, Visa Inc. “Visa invested in Monitise as an early thought leader with a vision of making mobile banking mainstream and extending that functionality to mobile payments. Over the past 5 years, Monitise has successfully demonstrated its leadership in the sector underscored by the company’s marquee clients, multiple network partnerships and recent agreement with IBM. Consistent with Visa’s increased investment in our in-house capabilities, and the substantial growth in Monitise, Visa is considering its options with regard to its Monitise stake.”
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