Asia fintech MoneyHero slides on first day of trading after merger with Peter Thiel-backed SPAC

Asian fintech firm MoneyHero on Friday fell on its first day of trading on the Nasdaq, following the completion of its merger with special purpose acquisition company Bridgetown Holdings.

Bridgetown Holdings Limited is backed by Thiel Capital – PayPal co-founder Peter Thiel’s venture capital firm – and Pacific Century Group, a private investment group founded and chaired by Hong Kong tycoon Richard Li.

MoneyHero’s new U.S. shares opened near $5.39 on Friday but quickly dropped to roughly $3.39 in morning trade. Bridgetown Holdings’s shares closed 4.06% lower at $6.15 on Thursday.

SPACs are shell companies that raise capital in an IPO and use the cash to merge with a private company in order to take it public, usually within two years.

“There is a larger appetite for capital markets in the U.S. than in Asia and the U.S. investors are looking for access to Southeast Asia region,” MoneyHero CEO Prashant Aggarwal told CNBC ahead of the listing.

MoneyHero plans to use proceeds of up to about $100 million to “further accelerate growth and capture a fast-growing market opportunity” in the digital distribution of financial products in Southeast Asia.

The deal with Bridgetown valued MoneyHero at approximately $310 million, according to an announcement on Thursday.

Founded in 2014 and dual-headquartered in Singapore and Hong Kong, MoneyHero Group – formerly known as Hyphen Group or CompareAsia Group – operates online financial comparison platforms with product comparison tools that recommend services such as credit cards, personal loans, mortgages and insurance to readers.

Across five markets, MoneyHero operates personal finance websites Singsaver and Seedly in Singapore, Moneymax in The Philippines, MoneyHero in Hong Kong, Money101 in Taiwan and CompareHero in Malaysia. Singapore is the firm’s largest market, followed by Hong Kong and The Philippines, said Aggarwal.

MoneyHero Group has yet to become profitable. Its unaudited net loss after tax for the two years ending Dec. 31 2021 and Dec. 31 2022 were approximately $31.0 million and $49.4 million respectively.

In its SEC filing, MoneyHero outlined a “clear path to profitability” from a company-wide reorganization, operational and management efficiency and reduction in operating costs.

“These actions have had a positive impact on our financial performance in the second half of 2022, and we expect this trend to continue in 2023 and beyond,” the filing said.

In November, MoneyHero Group, or Hyphen Group before the rebranding, laid off employees and saw the departure of its CEO.

“We took cost reduction measures in Q3 and Q4 2022 which was very much in line with what was happening in the tech industry. We closed down an unprofitable market which was Thailand. We reallocated resources, improved our marketing capabilities and we stopped focusing on just driving top line,” said Aggarwal.

MoneyHero says it currently works with 270 financial institutions, which includes banks and insurance firms, and saw 9.1 million average monthly unique users during the first six months of 2023.

“These are users who are coming on our websites looking for answers. Our objective is to simplify the complexities of financial products and connect these users to the providers,” said Aggarwal, who has held executive positions at Visa and American Express.

The firm earns a fee each time a consumer signs up for a service with the financial institutions, said Aggarwal, without specifying rates. The firm posted $68.1 million in revenue for 2022.

“We have demonstrated to our investors that this business model can turn profitable. We do intend to continue investing in future growth because we still feel we are scratching the surface. There is a lot of opportunity in Southeast Asian markets that we have proven that we haven’t fully captured yet,” said Aggarwal.

The SPAC market experienced a 76% decline in the number of IPOs in the first half of 2023 compared to the same period a year ago, according to a report by financial and risk advisory firm Kroll.

Vietnamese electric vehicle maker VinFast and Southeast Asia’s real estate portal PropertyGuru have fallen more than 50% from their IPO share prices, since listing via the SPAC route in the U.S. in August this year and March 2022 respectively.

On why the firm is launching its IPO at this time, Aggarwal said “there is no good or bad time.”

“A question that comes up quite a bit is: why now? And my response is: why not? Who knows the future about what the market conditions are going to be? The only thing I know is I am confident that my organization has reached the level of maturity, that we can be a publicly listed company,” said Aggarwal.

This year, the highly-anticipated IPOs of Instacart and Birkenstock have been underwhelming, while chip maker Arm has sank more than 18% since its September debut.