Singapore’s Nasdaq-listed companies in the news for all the wrong reasons

NASDAQ-LISTED Singapore companies have been in the news recently for all the wrong reasons.

The recent offer made by financial comparison platform MoneyHero for rival MoneySmart came as a surprise to everyone – including MoneySmart.

MoneySmart’s founder and chief executive officer Vinod Nair said the offer was “unsolicited”, and the company followed that up with its own statement, rejecting it.

On first reading, it might seem like MoneySmart was giving up on a potential exit for investors. But a closer look into Nasdaq-listed MoneyHero’s offer shows otherwise.

The US$8 million offer is an all-shares offer, in to-be-issued MoneyHero shares, with no cash component.

In its statement, MoneyHero hinted at some additional earnouts, which would normally be tied to revenue or growth targets for MoneySmart management to hit within a time frame, as cash or shares. An earnout is a contractual provision stating that the seller of a business will obtain additional compensation if the business meets specified financial targets in the future.

But, for investors looking to exit MoneySmart, any offer that exchanges shares in one for shares of the other is probably not ideal.

The board at MoneySmart also claimed that MoneyHero had not approached the company for discussions, and called the approach of the offer “neither serious nor credible”.

Conventionally, a share-swap acquisition is more common among startups that are looking to consolidate, merge or do a form of acqui-hire, where one startup acquires another for its talent pool.

The majority of acquisition offers from publicly traded companies, however, tend to be in the form of a mix of cash and shares.

Moreover, investors may be worried over the value of the shares since MoneyHero’s share price has been quite volatile since its business combination in October last year, when the firm merged with special-purpose acquisition company Bridgetown and began trading on Nasdaq.

The share price last peaked at US$4.03 in November 2023, but had tumbled to US$1.15 as at Sep 3. Since the combination, the stock has lost 61.9 per cent of its value, and MoneyHero’s market capitalisation has slid to US$45.3 million.

This is a far cry from MoneySmart’s valuation. The company was valued at US$161.7 million during a reverse takeover attempt by Asia-Pacific Strategic Investments in 2022.

While MoneySmart’s current valuation is not publicly known, it is likely to be far higher than MoneyHero’s US$8 million offer.

On the other hand, MoneyHero as a suitor, does not appear to be in the best financial shape.

For its latest first-quarter period, the company reported losses of US$13.1 million, ballooned from US$2.5 million just a year ago.

It recently had a round of layoffs in a bid to cut costs, with the axe affecting 80 employees across the entire group.

This raises the question whether the company is able to make a serious offer for a rival, especially one that is in the black, such as MoneySmart’s parent company.

Even if MoneySmart had been open to the deal, the proposed acquisition could draw scrutiny from anti-competition watchdogs.

If MoneyHero had been hoping that the market would look favourably on the proposed acquisition, this did not happen – market reaction was generally muted after the news became public.

MoneyHero is not the only Singapore-based Nasdaq company to hit a stumbling block lately.

Mobile-health Network Solutions, also known as MaNaDr, was on Aug 16 suspended by the Ministry of Health from offering telemedicine consultations from its clinic in City Gate. Investigations had uncovered numerous telemedicine consultations that lasted a minute or less, with the shortest taking all of one second.

MaNaDr can still offer in-person medical consultations at its clinic, and doctors from other clinics on its network are likely able to continue with telemedicine consultation.

However, the suspension could have a significant impact on its revenue and earnings.

This is because telemedicine is MaNaDr’s main source of revenue, says its Nasdaq prospectus. Telemedicine brought in US$6.8 million in 2023, or 86.7 per cent of its US$7.9 million revenue that year.

However, observers have noted that the sharp jump in numbers happened only recently, in 2023. In its prospectus, MaNaDr reported a 215.9 per cent increase in telemedicine transactions between 2022 and 2023, from 289,000 to 913,000. Private telemedicine transactions surged 415.9 per cent to 908,000 in 2023, from 176,000 the year before.

One of the reasons for the increase could have been the fall in public-sector telemedicine consultations from 113,000 to 5,000, providing its doctors with the bandwidth for private telemedicine consultations.

However, the large rise between 2022 and 2023 raises eyebrows, assuming that MaNaDr maintained the same number of doctors.

MaNaDr’s share price dived in less than a month from its listing on Apr 11. After an initial spike to US$6.90 from its listing price of US$6.70, MaNaDr’s share price fell sharply to US$3.39 on May 4.

At that time, the tumble prompted the company’s co-founders to issue a message on May 6. In an open letter, Dr Siaw Tung Yeng and Dr Rachel Teoh sought to assure shareholders, employees and partners about the company’s commitment to its long-term growth strategy. The letter seems to have had no real effect on shoring up the share price, which has continued to slip, hitting US$0.799 on Sep 4.

The move from being a privately held startup to a public company is a big one, and requires paying attention to the regulations and having a well-thought-out strategy. Being listed on Nasdaq is no guarantee of continued success.