Singapore-based personal finance platform MoneySmart is entering into a reverse takeover merger with Singapore-listed hotel operator Asia Pacific Strategic Investments (APS), according to a stock exchange filing on Thursday.
MoneySmart will hold 75.8% of the combined entity upon completion of the merger, while APS will relinquish and dispose of its real estate business, which was “significantly” disrupted by COVID-19 pandemic leading to net losses. APS’s property assets comprise a 113-room luxury riverside boutique hotel and retirement villages in Huzhou, China.
The move will see MoneySmart become a publicly traded firm on the Singapore Exchange (SGX), at a combined group valuation of $161.7 million.
Merger rationale
The merger will enable APS to “enable long-term interests” by tapping into a business that has the potential for growth and increases in overall revenues, the SGX filing added.
For MoneySmart, the deal would “significantly increase” the market capitalisation of the firm, while granting greater analyst coverage and investor interest in the firm.
MoneySmart’s founder and CEO told Straits Times that the capital injection will be used to grow the company’s insurance business and pursue potential merger and acquisition (M&A) opportunities. The Singapore-based firm recently launched Bubblegum, a digital insurance platform offering car and travel insurance to young and digitally savvy consumers.
“While the market is volatile and uncertain at the moment, we believe this presents a good opportunity for well-capitalised companies to pursue strategic acquisitions,” said Nair in the Straits Times report.
Nair added that it seeks to enter newly developed markets in Asia, due to high financial literacy and financial product penetration rates. The firm was founded in 2009 as a price comparison site for credit cards and loans. It currently operates in Singapore and Hong Kong.
Nair added that MoneySmart expects to list in the second quarter of 2023 once the relevant auditing and regulatory approvals are completed.
Exit on the horizon for MoneySmart shareholders
This deal could spell an exit for some of MoneySmart’s shareholders in the near term. These include Vinod Nair; Japanese price comparison site Kakaku.com; Straits Capital Investments (formerly known as SPH Ventures); Golden Gate Ventures; and Jo Hirao, among others. Nair is the largest shareholder in MoneySmart (26.16%), followed by Kakaku.com (24.36%), and SPH Ventures (14.75%). Golden Gate Ventures holds a combined 8.54% stake across 4 different fund vehicles.
The SGX filing added that MoneySmart had an implied valuation of S$55.4 million ($39 million), representing a roughly 100% and 211% premium to the Group’s net asset value of S$27.7 million ($19.5 million) as of 30 June 2022, and market capitalisation of S$17.8 million ($12.56 million) of the company, as at 28 October 2022.
This valuation, however, still represents a sharp decline from MoneySmart’s valuation from its last privately raised round. According to DealStreetAsia’s Data VANTAGE, MoneySmart was valued at $84 million (in US dollars). It has raised a total of $22.3 million in funds since its inception.
MoneySmart is still a loss-making company. The firm saw a 35% year-on-year jump in revenue to S$31.6 million in FY2021, but sales costs also rose by 52% to S$21.4 million over the same period. Overall losses deepened as a result. MoneySmart recorded a comprehensive loss of S$10.8 million in FY2021, a 6.4x jump from the previous year.
