Sea aims to raise $8.5 billion in 2021’s biggest equity deal

The online gaming and e-commerce firm is offering 11 million shares plus US$2.5 billion of equity-linked debt.
The online gaming and e-commerce firm is offering 11 million shares plus US$2.5 billion of equity-linked debt.PHOTO: SEA LIMITED

NEW YORK (BLOOMBERG) - Sea Ltd aims to raise US$6.3 billion (S$8.48 billion) in the largest equity offering of the year, a deal that will drive a global expansion and acquisitions for South-east Asia’s largest company.

The online gaming and e-commerce firm backed by Tencent Holdings is offering 11 million shares, a stake worth about US$3.8 billion at Wednesday’s (Sept 8) close. It also intends to issue US$2.5 billion of equity-linked debt. Sea, which has risen more than 70 per cent this year, fell in post-marketing trading in New York.

The region’s most valuable company has rapidly expanded its market share in e-commerce and gaming during the pandemic, riding hit titles like shooter game Free Fire and its Shopee online shopping app. Its founder Forrest Li became Singapore’s richest person in August after shares of his company surged.

“Sea is going for a market expansion, especially in new businesses such as e-commerce in Latin America and food delivery in South-east Asia,” said Mr Sachin Mittal, an analyst with DBS Group Holdings. “Competition is intensifying and gaining market share is of utmost importance.”

The 11 million shares alone that Sea is offering will be the biggest equity sale since Chinese e-commerce operator Pinduoduo raised US$4.1 billion on Nov 18, according to data compiled by Bloomberg. Including the convertible bonds, the overall deal will be the biggest equity raise since T-Mobile US Inc’s in June 2020.

The deal, offered via Goldman Sachs, JPMorgan and Bank of America, arrives at a time of resurgence in cross-border issuance from Asia. Nio on Tuesday announced plans to raise up to US$2 billion in what would be the biggest US offering by a company based in China since Didi Global.

Sea’s latest capital-raising follows a US$2.6 billion stock sale in December and a US$1.35 billion deal in 2019. It will deploy the latest chunk of capital towards “business expansion and other general corporate purposes, including potential strategic investments and acquisitions”, the company said in a statement.

Sea in August raised its annual forecasts for its two main businesses, underscoring its confidence in an expanding international business that is gaining momentum beyond its home region.

The stock has risen more than eightfold since the beginning of 2020 as Sea invests cash generated from popular mobile battle royale game Free Fire to establish itself as a leader in e-commerce in South-east Asia. At the same time, it has expanded its online shopping business in Brazil as part of a strategy to become a global player, increasing competition with Latin American e-commerce giant MercadoLibre.

In its home region, Sea remains locked in a fierce battle with GoTo and Grab Holdings, all bolstering their e-commerce and fintech offerings in one of the fastest-growing Internet markets on the planet. South-east Asia’s online spending is set to triple to more than US$300 billion by 2025, research from Google and its partners shows.

It is now turning to fintech for further growth beyond gaming and e-commerce, while also expanding beyond the region. It won a digital-banking licence in Singapore in December and acquired Indonesia’s PT Bank Kesejahteraan Ekonomi, better known as Bank BKE, people familiar with the matter said in January.