In front of an open-air Jakarta restaurant, delivery drivers clad in the orange colours of South-east Asian tech group Sea Ltd wait for orders next to the green-jacketed riders of market leaders Gojek and Grab, in what has become the latest battleground for tech supremacy in South-east Asia.

The humble noodles eatery signed up for Sea's nascent ShopeeFood service a month ago, but "immediately, there were orders every day", said manager M. A. Rasyid.

Riding on the success of a cash-generating gaming business, United States-listed Sea has invested heavily in its Shopee e-commerce brand and successfully taken on Alibaba's Lazada and other rivals in recent years.

Its share price has risen five-fold over the past year, giving Singapore-based Sea a market value of US$111 billion (S$149.4 billion).

Now it is muscling into food delivery and financial services in Indonesia, the world's fourth-most-populous country, posing a new threat to regional rivals including ride-hailing and delivery unicorns Grab and Gojek.

At stake is a slice of the more than 400 million Internet users in South-east Asia's digital economy, which is estimated to triple to US$309 billion by 2025, according to a study by Google, Temasek and Bain & Company.

Tech behemoths, including Tencent, a major investor in Sea, Alibaba, Google and SoftBank Group, are big backers of the regional champions.

Sources say Sea's aggressive expansion is one driver of merger discussions between Gojek and e-commerce platform Tokopedia. The Indonesian firms aim to create an US$18 billion powerhouse to fight off Sea and regional giant Grab.

Meanwhile, Grab and others, including travel app Traveloka and Indonesian e-commerce unicorn Bukalapak, are rushing for public listings, hoping to ride the coat-tails of Sea's stock rally while defending their turf, according to Reuters interviews with more than a dozen people.

"Sea is like Thanos, massive and powerful, and able to take down half of the world, or in this case half the start-ups," Mr Willson Cuaca, co-founder of East Ventures and an early backer of Tokopedia, joked as he compared Sea with the powerful villain in the Marvel film series. "Like the Avengers, companies need to band together if they want to ensure their survival and to win the war."

CASH IS KING

Sea's stock rally reflects a scarcity of options for investors seeking exposure to the booming South-east Asian Internet sector.

It went public in 2017 and has raised some US$7 billion in share and debt sales, with early investor Tencent now holding a stake of about 20 per cent.

That investor appetite, combined with a need to raise cash to match Sea's muscle, is forcing rivals to seek listings as quickly as they can, bankers and executives familiar with the matter say.

Sources say the Gojek-Tokopedia merger, which is likely to be finalised within weeks, will be followed by a Jakarta listing in the second half of this year, then a mega IPO in the United States targeted for next year.

Grab and Traveloka, for their part, aim to accelerate the process by merging with special purpose acquisition companies, sources said. Bukalapak is planning the same, after a Jakarta IPO this year.

"The market is pretty welcoming for tech stocks. It's an opportunity for Grab if they are ready for it," said Mr Foo Jixun, a managing partner at GGV Capital, which has invested in Grab.

Sea's success owes much to its online gaming business Garena, whose 2017 title Free Fire became the most downloaded game globally over the past two years.

It is using the cash from Garena to repeat its success in e-commerce, food delivery and financial services.

Sea's Shopee division started off in 2015 as a platform for local sellers and soon gained traction with merchants regionally.

It has now overtaken both Lazada as the top e-commerce player regionally and Tokopedia as the leader in Indonesia, thanks in part to innovations such as adding social features to its service.

Both Gojek and Grab, which have pursued on-again, off-again merger talks with each other for years, believe they can ward off Sea's move into food delivery, thanks to well-honed logistics networks and early-mover advantages.

But they could be hard-pressed to match Sea's subsidies in Indonesia.

In Vietnam, Sea-owned food delivery service Now is the market leader, while Grab is No. 2, according to a January report by advisory firm Momentum Works, whose chief operating officer Ng Yorlin, said South-east Asia's food delivery sector grew 183 per cent last year.

"Now had the advantage of being local and being early," Ms Ng said. "Sea's backing definitely helps."

In Indonesia, ShopeeFood is wooing vendors by touting its 80 million-strong user base and promising to subsidise steep discounting.

The next showdown will be in financial services.

Sea has bought Indonesia's Bank BKE and has hired a veteran of China's peer-to-peer platforms to head its "SeaMoney" banking efforts.

"SeaMoney can become the Ant Financial of South-east Asia," said Mr Daniel Jacobs, managing partner at emerging markets hedge fund Kora, a Sea shareholder.

"After payments, they have the vision and will to grow into adjacent areas, from 'buy now, pay later' on the customer side to merchant credit and all sorts of financial services."

But Tokopedia and Grab, both of which own part of Indonesian payment app OVO, have similar ambitions. And Sea and Grab are set to square off in Singapore, where both won coveted digital bank licences in December.

Grab is backed by investors including SoftBank Group and Mitsubishi UFJ Financial Group.

"This is going to be a battle of the titans," said Mr Patrick Walujo, the co-founder of Indonesia-focused private-equity firm Northstar Group and a Gojek investor.

REUTERS