[Updated] The curious case of MoneyHero's bid for MoneySmart

Editor’s note: The article has been updated to add comments from MoneyHero.

The acquisition drama between Nasdaq-listed MoneyHero and rival MoneySmart unfolded swiftly last month, with an offer and rejection within 24 hours. However, underlying tensions between the two companies had been simmering beneath the surface for much longer.

A source familiar with the matter told DealStreetAsia that the Singaporean competitors, which operate personal finance platforms, have been in on-and-off discussions about different strategic transactions for years. In May, MoneyHero started working with an investment banker to help with a formal outreach to MoneySmart for a deal, the source added.

“There have been informal touchpoints and conversations between the two companies over the past two years, which is typical for players in a small industry,” confirmed MoneySmart founder Vinod Nair. 

“But these interactions never evolved into anything formal or credible about a potential combination, and most of these were general in nature, covering several different topics,” he said. 

MoneyHero refuted the allegations of an unsolicited bid, saying, “MoneyHero has been in long-standing discussions with MoneySmart about strategic opportunities. While our intention was and remains to acquire 100% of MoneySmart, we are also open to exploring the purchase of any number of shares from individual shareholders.”

“…MoneyHero determined in late July it was the right time to (again) explore an M&A opportunity with MoneySmart—which has been in off-and-on communications regarding a potential deal with MoneyHero since 2021,” the company said.

According to another industry source, MoneyHero had previously sent a term sheet to MoneySmart. However, the latter rejected it because the offer did not meet its expectations. 

MoneySmart’s Nair said that the company had repeatedly shunned approaches by MoneyHero, some of which were unconventional. 

“We were in talks with an investment banker for a separate project. Later, we heard that MoneyHero reached out to them enquiring if they were in touch with us and expressed their interest in potentially doing a deal with us,” Nair said. He emphasised to the banker that the firm was not interested in any meetings or discussions with MoneyHero.

Nair also alleged that MoneyHero had contacted some of his company’s shareholders and board members with ‘vague proposals’.

“For example, Golden Gate Ventures, one of our largest investors, took a call with MoneyHero, initiated by their board members, Kenneth Chan and Derek Fong, in early 2024. The call was set up in the context of getting acquainted. However, the call escalated quickly into predatory acquiring intentions,” he said.

The VC firm subsequently stopped all communications and directed MoneyHero to the management of MoneySmart, he added.

When contacted by DealStreetAsia, Golden Gate Ventures partner Michael Lints said the firm fully supports MoneySmart’s press statement regarding MoneyHero’s unsolicited offer. He refused to comment further.

Rohith Murthy, the CEO of MoneyHero, defended the firm’s decision to publicly announce its letter of intent (LOI), a non-binding document outlining the preliminary terms of a deal that also serves as an agreement to enter into exclusive talks. “We [went] out and told all stakeholders that we are interested in buying this company, either 100% or a portion of it.” 

Issuing an LOI does not indicate that talks are going on between both parties, according to two seasoned lawyers with experience working with startups and venture capital. “The issue is whether an LOI is accepted [by the target company]. Issuing an LOI doesn’t mean that the counterparty has accepted,” one of them said.

MoneySmart’s Nair said he woke up on August 23 to find the offer in the news before seeing it in his inbox. “The email from Rohith [Murthy] was the very first email that I got from him as the company’s CEO. I haven’t met or spoken to him or their new CFO before.”

Two weeks after the offer was rejected by MoneySmart, Murthy reiterated his firm’s intention to merge the businesses in a conversation with DealStreetAsia.

“If there is an interest from their side, we will definitely engage. But at this point, we are still very sincere about our M&A plans. If this doesn’t materialise, we may look at other options,” Murthy said on September 6. 

Six days later, the firm’s media representative wrote in an email, “MoneySmart has declined our offer, and we respect their decision.”

A case of bad blood

The MoneySmart founder said the firm had been subjected to predatory tactics by its US-listed rival. Roughly 60-70% of the private firm’s employees have been contacted by MoneyHero, from interns to CXOs, to jump ship over the last year, Nair claimed. 

“They have been trying to persuade partners like banks and insurance companies not to work with us. The partners told us that they pushed back and said that they like working with MoneySmart,” he said.

In response to DealStreetAsia’s query about poaching allegations against it, MoneyHero said, “Earlier this year, MoneySmart filed a lawsuit against a MoneyHero employee who previously worked for MoneySmart to stop this individual from joining us. MoneyHero strongly opposed this surprising attack on the individual’s freedom to change jobs and filed a lawsuit against MoneySmart.”

“In April, the Singapore High Court discharged interim injunctions initially granted in favour of MoneySmart and the individual was quickly able to rejoin MoneyHero. Since then, we’ve attracted talent from a variety of industries, including senior hires like our CFO from Alibaba-Lazada,” the company added.

Nair said MoneyHero has run multiple advertisements on social media networks undermining its competitor since October last year. 

“This kind of behaviour doesn’t foster a foundation of constructive discussion. That’s why we’re not interested and are very happy to continue running our business. I don’t see a very strong values alignment in the way we approach things and run our businesses,” Nair said.

MoneyHero retorted, saying, “While competitive comparisons are common across the fintech industry, including from MoneySmart, MoneyHero’s focus is on highlighting our unique offerings. Similar tactics are used by players in the industry, and healthy competition drives everyone to improve and innovate.”

Industry observers told DealStreetAsia that MoneyHero’s weak share price performance since its public debut may have motivated its unsolicited bid for MoneySmart and the public announcement. The company’s stock price has declined over 68% in the last one year. 

A lawyer who spoke to DealStreetAsia stated that depending on the stock exchange they are listed on, publicly listed companies making misleading statements about acquisitions could face charges for misrepresenting information to investors or manipulating financial markets.