June 8, 2007 / 9:07 AM / 11 years ago

Morse plans to demerge its mobile banking business

LONDON, June 8 (Reuters) - British consulting company Morse Plc MOR.L said on Friday it would spin off its mobile banking business Monitise on London’s junior AIM market, allowing both companies to pursue independent strategies.

Monitise will raise 20 million pounds ($39.5 million) in the flotation through a share placing to drive expansion at home and overseas, Monitise Chief Executive Alastair Lukies said.

“Retail banks see the mobile now as their fifth way to market after branches, ATMs, call centres and the Internet,” Lukies told reporters, adding that according to third-party research the global mobile banking market is forecast to be worth $37 billion by 2008.

Currently, 12 million consumers access Monitise’s service platform and Lukies expects this to rise to 33 million by the end of the summer.

Investec analysts said in a note they expected more news flow from Monitise in the coming months, as additional banks in Britain should sign up for the platform adoption.

The Monitise business, that Lukies described as “the electronic bank in your pocket”, provides software and infrastructure so people can carry out enquiries and banking transactions securely from a their mobile phones.

Teather and Greenwood analysts welcomed the decision and upgraded Morse shares to “buy” from “hold”.

“This represents very good value given that we see significant scope for medium-term margin enhancement through internal cost reduction initiatives,” they said in a note.

Morse shareholders will receive one Monitise share for each Morse share and Monitise shares are expected to start trading on London’s junior market AIM on June 28.

Investec valued Monitise prior to the new monies to be raised at between 45 million pounds and 60 million pounds, while Teather and Greenwood said it was worth about 30 million pounds.

Morse shares were up 1.2 percent at 105 pence by 0855 GMT, valuing the firm at 164.3 million pounds.

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