Velti

Mobile marketing and advertising technology companyVelti has closed the sale of its India, US and UK mobile marketing businesses and certain part of its US-based advertising businesses to affiliates of GSO Capital Partners LP, the credit division of the PE firm Blackstone. Velti has over 150 employees in India, with offices in Mumbai, Chennai, Delhi and Bangalore.

On December 2oth 2013, the company had received a court approval for the sale of Velti Inc and Air2Web Inc in the US, Air2Web India, Velti DR Limited and Mobile Interactive Group, Ltd in the UK, and Velti Netherlands BV in the Netherlands. The financial terms of the agreement were not disclosed. As part of the transaction, GSO has also committed to provide up to $25 million in debtor-in-possession financing, including a $10 million cash infusion to support the operations included in the proposed sale.

Velti had acquired mobile marketing and CRM company Air2Web for around $19 million in 2011. Velti had also tied up with HT Media to form a mobile marketing joint venture called HT Mobile in November 2008. HT Digital had bought out Velti’s stake for a undisclosed nominal price in February 2013.

Focus Areas in India

In an email to MediaNama, Velti India President and CEO Jay Sheth is quoted as saying that GSO provides the company with greater financial stability and resources needed to grow the business. Deepak Goyal, Vice President, Sales & Marketing, Operator Relations, MM Sales India adds that Velti saw revenues grow over 100% in 2013, staking the claim that it is the largest mobile and messaging solutions Company in India. Asia and Africa combined contributed only 13% (around $34.2 million to Velti’s revenues, growing 43% from $24 million in FY11. Remember that India would be a fraction of this. Details here.

A Velti spokesperson has told us via email that “Velti would continue to focus on the enterprise segment in India. Currently, Velti’s major revenue comes from BFSI, DTH and Govt. sector as we cater to SBI, HDFC Bank, ICICI Bank, Citi Bank, Bank of Baroda, NSE, Dish TV, Tata Sky, UADAI, NIC, DAVP to name a few. We would focus on messaging solutions (A2P messaging), Voice, USSD, Mobile Apps and leverage our experience from other geographies e.g. UK & US for innovative mobile marketing solutions & brand presence business for the large FMCG brands in India.”

The GSO acquired part of Velti also has a Performance Marketing Business Unit operated out of Greece, and with business in Central and Eastern Europe and the Middle East.

Financial woes that led to the sale

Velti had declared $130 million in losses at the end of Q2 2013 compared with a net loss of $17.7 million at the end of Q2 2012. The company highlighted difficulties it has faced collecting payments in some countries, particularly in Greece and Cyprus, as contributing to its disappointing results. This news was followed by a class action law suit against the company by investors who said that the company misled shareholders by claiming for more than two years it could recover money owed by customers in Greece and Cyprus. The investor suit targeted Velti and three current and former executives: CEO Alex Moukas, CFO Jeffrey G. Ross, and former CFO Wilson W. Cheung.

Velti recently delisted from NASDAQ, on November 26th, and following the decision to shut its Mobclix ad exchange business, filing a voluntary petition under Chapter 7 of the US Bankruptcy Code to initiate an orderly wind-down of the business. Mobclix was the only Velti business to cease operations.