Sea, formerly the gaming company Garena, filed confidentially with the US Securities and Exchange Commission, earlier May 24, to list itself in early 2018.

Reference: Southeast Asia’s biggest startup reportedly files for US$1 billion IPO, CNBC dated May 24 2017.

Our Insights:

  • Sea’s IPO demonstrates that the Southeast Asian market is large enough to scale and grow their business with the US$1B raised from their upcoming IPO. Its current businesses are divided into three areas: (1) Digital entertainment platform or eSports is its competitive advantage and is driven by mobile and desktop gaming (2) Ecommerce driven by the Shopee app, (3) Airpay, its digital wallet focused on financial services.
  • To date, Sea has not disclosed its valuation for its listing. Industry sources say Sea is potentially valued as US$10B and that its preferred destination for public listing is in the US. Despite the Singapore Exchange are making changes, for example, to allow for dual share structure in public companies, it is unlikely the Singapore unicorn will list where its headquarters is located.
  • In each of its businesses, it faces intense competition. Twitch, now a subsidiary of Amazon will be a threat to its digital entertainment platform. Rumours say that Amazon attempted to acquire Sea but called it off because of price. In the e-commerce space, Shopee is up against Singapore-based Carousell which is the leading mobile e-market offering. In digital financial services, Sea is likely to face Grab and Go-jek in Southeast Asia. Yet, Sea and Grab shared common investors such as Alibaba Group, while Go-Jek received investments recently from Tencent. Between Grab and Sea, whichever company wins the financial services battle, Alibaba Group benefits.

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