Singapore: Garena rebrands itself as Sea with $550m Series E in run-up to IPO

Garena headquarters in Singapore, as featured on its Facebook page

Singapore-based gaming unicorn Garena Interactive has rebranded as Sea Ltd., having secured $550 million in funds as it competes with Chinese e-commerce major Alibaba Group and other players in Indonesia.

The latest round sees it secure capital from the likes of Farallon Capital Management, Hillhouse CapitalCathay Financial Holding Co. and President International Development Corporation, an investment arm of Taiwanese food conglomerate Uni-President Enterprises Corp.

Other backers of Garena include the likes of Tencent Holdings, Keytone Ventures, Khazanah Nasional Bhd, General Atlantic and Ontario Teachers’ Pension Plan. Other notable investors backing Garena include GDP Venture, led by Martin Hartono, and JG Summit Holdings Inc., founded by John Gokongwei.

According to Sea, most of the investment proceeds will finance the expansion of Shopee in Indonesia. The company claims that the online marketplace’s annualised gross merchandise value has more than doubled in the past nine months to more than $3 billion.

The Southeast Asian technology firm was founded in 2009 by Forrest Li and is among the region’s most valuable startups, with a valuation exceeding $4 billion at this point. It is also appointing advisers to aid in its Indonesia push: former Singapore foreign minister George Yeo, former Indonesian trade minister Mari Pangestu and Pandu Sjahrir, a director of Indonesian coal producer PT Toba Bara Sejahtra Tbk.

Garena’s last funding round was a Series D round in March 2016 led by Malaysian sovereign venture fund Khazanah Nasional and venture capital major General Atlantic that saw it valued at $3.75 billion.

Starting as a digital content platform provider, Garena eventually expanded into internet services to leverage on the growth of the region’s e-commerce market and currently maintains C2C mobile marketplace Shopee and payment services AirPay, which cater to the region’s 620 million consumers.

In an interaction with Bloomberg in March 2016, Li said, “Our aspiration is to build Garena into a $100-billion consumer company in 10 years,” indicating his ambitions for the firm.

The firm is gearing up for an initial public offer (IPO) – a public listing estimated to raise $1 billion on a US bourse – and is also competing for market share in Indonesia, Southeast Asia’s largest economy and one that is set to emerge as the fourth largest economy globally by 2050, in terms of purchasing power parity.

At the time, Garena’s Group President, Nick Nash, had told DEALSTREETASIA: “There are a lot of things about the markets that are out of our control. But at the end of the day, great companies can always go public and our goal is to build a great company. An IPO is a prudent thing to consider to build a sustainable business. At some point, we will consider going down that path, but at the time that makes sense for the business and the shareholders. Not a single one of our shareholders have asked us to go public; they’ve asked us to take our time.”

The rebranding exercise comes at a time when Alibaba has expanded its online presence in the region with the acquisition of Lazada in 2016, while JD.com is investing in Indonesian e-commerce player Tokopedia. This also comes at Amazon prepares to strengthen and expand its own operations footprint in the region.

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