Tencent-backed Sea, formerly Garena, begins process for New York IPO

The office of gaming firm Sea, formerly known as Garena, at Fusionopolis.
The office of gaming firm Sea, formerly known as Garena, at Fusionopolis.PHOTO: THE BUSINESS TIMES

SINGAPORE - Gaming and e-commerce firm Sea, formerly known as Garena, has begun a process towards an initial public offering (IPO) in New York.

Sea, Singapore's first billion-dollar tech start-up, has filed a registration statement with the US Securities and Exchange Commission to list its American Depositary Shares (ADS) on the New York Stock Exchange under the ticker symbol "SE."

Each ADS will represent a yet to be fixed number of Class A ordinary shares in Sea.

The IPO has an indicative size of US$1 billion (S$1.35 billion), according to Sea's registration statement filed on Saturday ( Sept 23).

The company declined to 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 AirPay, a mobile wallet. In 2015, it launched mobile e-commerce app Shopee.

Sea's stated mission is to use technology to "better the lives" of consumers and small businesses in Greater Southeast Asia.

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 raked in US$195 million in revenue but made 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's founder Forrest Li and Chinese Internet giant Tencent retain substantial influence over the company even after the IPO.

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

Each Class A share will be entitled to one vote, and each Class B ordinary 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, Philippine tycoon John Gokongwei's JG Summit Holdings, as well as GDP Venture, led by Martin Hartono, the son of Indonesia's richest man.

Prior to that, Sea had raised funds from SeaTown, a unit of Singapore state investment firm Temasek Holdings, and Malaysia's Khazanah Nasional.

Former Singapore Foreign Minister George Yeo joined Sea as a senior non-business advisor in 2016.

Goldman Sachs (Asia), Morgan Stanley & Co and Credit Suisse Securities (USA) are the joint bookrunners for the IPO.

The number of shares to be offered and the price range have not yet been determined.