Singapore tech start-up Sea targeting $1.35b in New York IPO

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, US, on Sept 21, 2017.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, US, on Sept 21, 2017. PHOTO: REUTERS

Singapore's first potential billion- dollar technology start-up company is headed for the Big Apple.

Gaming and e-commerce firm Sea, formerly Garena, still has to win over investors on the New York Stock Exchange (NYSE).

It may be on track to be Singapore's first "unicorn" tech start-up, valued by investors at US$1 billion (S$1.35 billion) or more. The whimsical term refers to such firms' rarity.

Heavy hitters such as Goldman Sachs and other top banks, along with Temasek Holdings and its Malaysian counterpart Khazanah Nasional, are involved. Former Singapore foreign minister George Yeo is a top non-business adviser.

Until the shares go public, it is hard to gauge Sea's full worth, but the firm aims to raise US$1 billion for a portion, not yet disclosed, of its total shares. Last year, the firm put its worth at US$3.75 billion.

Sea has just begun the formal process towards an initial public offering (IPO) in New York.

It filed a registration statement with the United States Securities and Exchange Commission to list its American depositary shares on the NYSE under the ticker symbol "SE".

The IPO has an indicative size of US$1 billion , according to Sea's registration statement filed last Saturday. It declined comment but roadshows are expected to begin soon.

Sea began in 2009 as Garena Interactive Holding, a computer gaming platform well known to League Of Legends gamers.

In 2014, it launched mobile wallet AirPay. In 2015, it launched mobile e-commerce app Shopee.

It operates across Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia and Singapore, and derives most of its revenue from Thailand and Taiwan.

In the six months to June 30, Sea posted US$195 million in revenue but a net loss of US$165 million as sales and marketing expenses ballooned to US$138 million.

Losses have widened every year since 2014 as cash was ploughed into growing the e-commerce business.

Last year, digital entertainment revenue accounted for 95 per cent of total revenue.

Sea will have a dual-class share structure, in which Class B shares have more voting power than Class A shares. This ensures that Sea founder Forrest Li and Chinese Internet giant Tencent Holdings retain substantial influence over the company even after the IPO.

Tencent is Sea's largest shareholder, with a 39.7 per cent stake as of June 30. Mr Li had a 20 per cent stake.

Each Class A share will be entitled to one vote, and each Class B share to three votes.

The proposed IPO comes soon after Sea's last funding round in May, when it raised US$550 million from investors including Hillhouse Capital, JG Summit Holdings and GDP Venture. Sea also raised funds from Temasek unit SeaTown and Khazanah. Goldman Sachs (Asia), Morgan Stanley and Credit Suisse Securities (US) are joint IPO bookrunners.

A version of this article appeared in the print edition of The Straits Times on September 25, 2017, with the headline 'S'pore tech start-up Sea targeting $1.35b in New York IPO'. Print Edition | Subscribe