Singapore’s CXA looking to sell brokerage business in Shanghai, Beijing

Singapore’s CXA Group is selling off its remaining brokerage units in Shanghai and Beijing as part of its shift towards focusing on its software-as-a-service (SaaS) business.

This comes after CXA sold its brokerage business in Singapore and Hong Kong to employee benefits broker Pacific Prime for S$20 million (US$15 million) in February.

Rosaline Chow Koo, founder and CEO of CXA. Photo credit: Tech in Asia.

Rosaline Chow Koo, founder and CEO of CXA, told Tech in Asia that the development comes as its high-touch brokerage business failed to grow due to restrictions on face-to-face sales brought about by the pandemic. But she added that the company isn’t close to finalizing the sale of the units.

Meanwhile, CXA’s white-label SaaS business grew over 200% during the lockdown period, according to Koo, as the threat of Covid-19 urged insurers to the company’s bancassurance platform. The insurtech player offers its SaaS product to small and medium-sized businesses in China, Hong Kong, Singapore, and Europe.

This latest development comes as CXA seems to be facing certain financial issues. The company is also exploring exit options amid difficulties in raising capital, according to a DealStreetAsia report that cited sources familiar with the situation.

When TIA pressed Koo on this, she denied the that CXA was in financial trouble, saying that the company has “sufficient capital, given the proceeds of our brokerage sales.”

Referencing filings with Singapore’s Accounting and Corporate Regulatory Authority, the DSA report also noted that auditor Deloitte & Touche had flagged material uncertainty of the company’s net current liabilities at the company and group level.

In March, Tech in Asia was the first to report that CXA will be shutting down its Vietnam tech hub by April 16, laying off 70 employees. The company has now downsized its headcount from 329 to 120 employees. The move comes as the startup aims to consolidate all its tech teams into China to better support its shift to SaaS, Koo previously shared.

It was also reported that in 2020, the SaaS business accounted for 70% of CXA’s total revenues, while the rest came from its brokerage division.

See Also: How CXA’s big SaaS bet paid off during Covid-19

According to CXA’s 2019 financial statements, the company posted S$26.4 million (US$19.7 million) in revenues for the year ended December 31, 2019. It also registered a loss of S$29.7 million (US$22.2 million) in 2019.