Layoffs at Richard Li-backed Hyphen Group after SPAC deal falls through

Hyphen Group, a fintech company backed by Hong Kong billionaire Richard Li, has made at least two rounds of layoffs this year after investment deals fell through, according to internal documents reviewed by Tech in Asia and corroborated by sources who spoke on the condition of anonymity.

Sam Allen, who served as Hyphen Group’s CEO since April 2016, also left in October 2022. The company says that Derek Fong and Kenneth Chan, senior executives at Pacific Century Group subsidiary PCCW, will serve as interim co-CEOs.

In October, PCCW, along with other investors, injected US$20 million into the company, which acquired Singapore-based personal finance platform Seedly in 2020.

Photo credit: Tech in Asia

“Whilst the business is on a very strong trajectory, we must re-organize and streamline where the market demands,” says a Hyphen Group spokesperson in a statement. “As a part of this process, we have re-engineered our organizational structure to reduce complexity and ensure that we become nimbler and more effective.”

An email sent to employees on June 22 said that Hyphen Group, which previously operated under the CompareAsiaGroup brand, exercised the first round of layoffs that month, which affected 20% of its workforce.

Allen’s departure was then announced in an email to staff dated October 7, which was signed off by Allen, president and chief commercial officer Prashant Aggarwal, as well as CFO and COO Shaun Kraft. The email also showed that Aggarwal and Kraft would jointly lead the company from that point.

Aggarwal then announced another round of layoffs in early November: It affected a total of 15 people across the group, including general managers. He also said that the Hong Kong-based firm would exit Thailand, while continuing its operations in Singapore, Taiwan, Malaysia, and the Philippines.

These developments come just one year after Bloomberg reported that Hyphen Group was in advanced talks for a SPAC deal with blank-check company Provident Acquisition Corp. The resulting entity’s valuation was projected to be US$1 billion.

Failed deals, restructuring

According to Tech in Asia’s funding database, Hyphen Group raised a total of US$116 million – including a US$20 million series B round in August 2019 – before it engaged in SPAC discussions in late 2021. Other than PCCW, investors in the company include Hong Kong conglomerate Jardine Matheson (via Jardine Pacific), Alibaba Group, and Goldman Sachs.

In his departure email, Allen said that the SPAC talks had eventually fallen through due to “challenging SPAC market conditions and shifting investor appetite away from pre-profitability growth companies.”

He also said that after the failed SPAC attempt, Hyphen Group refocused its efforts on raising private capital through a traditional series C round. However, this did not come to fruition, as “capital markets and global macro conditions took a turn for the worse in Q2.”

When he announced the 20% job cuts in June, Allen said that the company’s team size and cost base had expanded over the past year and that the layoff decision sat “solely and entirely” with him.

A “sustainable path”