INSUBCONTINENT EXCLUSIVE:
Southeast Asia-based internet firm Sea is raising $400 million through the sale of notes in what would be its first fundraising activity
since it went public via in an October 2017 IPO that raised over $1 billion.
The Singapore-based company, formerly known as Garena, said
that the senior note offering will put toward general costs and business expansion
Long-time investor Tencent is expected to buy up $50 million of the notes on offer, and the offering itself could be extended by a further
$60 million.
Sea IPO was a landmark for Southeast Asia, where startup exits are few and far between, but the company hasn''t exactly set
Wall Street on fire since making its public bow
Its share price is $16.40 at the time of writing, having debuted at $15
It has risen thanks to gains over the past month following its most recent earnings but initially the company spent a lot of time priced
under $15.
Sea share price, via Yahoo Finance
So what got investors excited In short, signs of growth.
Revenue for Q1 jumped 81 percent
year-on-year as its Shopee e-commerce service doubled its GMV and the firm AirPay payment unit quadrupled its transaction volume, but
ultimately the business remains unprofitable
Losses jumped from $73 million to $216 million and Sea cost of revenue more than doubled, indicating that it is still chasing growth for its
businesses.
While AirPay and Shopee, which competes with the likes of Alibaba-owned Lazada for the attention of Southeast Asia 600 million
consumers,are growing, the same can''t be said of Sea main business
It rose to prominence selling games via its Garena service, with Tencent a particular ally here, but that businessis seeing new user growth
flatten and and revenue gains slow.
It makes sense that Sea is playing up its digital business sincethe big opportunity in Southeast Asia is
e-commerce, as evidenced by Alibaba recent double-down on Lazada — which it first bought a majority stake in for $1 billion in 2016
Alibaba invested $1 billion more in 2017 and thena further $2 billion in March to increase its ownership.It also installed a number of its
own executives in a bid to help Lazada grow its business and the overall e-commerce industry in Southeast Asia, too.
A much-cited report
co-authored by Google forecasts that e-commerce in Southeast Asia will surpass $88 billion by 2025
That up from an estimated $10.9 billion in 2017.
Sea said previously that it expects Shopee to reach $8.2-$8.7 billion in GMV in 2018, a
increase that potentially as high as 112 percent year-on-year
That up on its previous guidance of $7.5-$8 billion but, since it is GMV, it doesn''t translate to direct revenue for the company itself
Sea had previously boosted Shopee by allowing a high burn rate to fund merchant and buyer promotions
It only began to monetize the service last year.
