Regional internet company Sea Ltd is set to raise a minimum of $1.35 billion in a follow-on stock offering after pricing 60 million American Depositary Shares (ADS) at $22.50 each. The firm had earlier announced plans to sell 50 million shares.
The NYSE-listed company said it has also granted the underwriters a 30-day option to purchase up to an additional 9 million shares on the same terms and conditions. If the option is availed, Sea could raise as much as $1.55 billion in the share sale.
The offering is expected to close on March 8, 2019, subject to customary closing conditions, the company said.
An entity affiliated with Tencent Holdings Limited, one of Sea’s principal shareholders, and an entity affiliated with one of the company’s directors are expected to purchase an aggregate of 6.3 million ADS in the offering, which is managed by Goldman Sachs (Asia), Morgan Stanley, and China International Capital Corporation.
The company expects to use the net proceeds from this offering for business expansion and other general corporate purposes.
“Sea upsized the offering by 20 per cent to 60 million ADRs, so it’s clearly a hot deal (from bookbuild feedback) so they could price it at $22.50, which is a normal 6-7 per cent discount from 3/5 closing price (normal hours trading),” said Smartkarma analyst Johannes Salim.
The company had about $1 billion of cash and cash equivalents on its balance sheet as of December-end 2018. Sea, whose net loss widened to $961 million for 2018, has forecast that its annual adjusted revenues for both its gaming and e-commerce arms – Garena and Shopee – will more than double in 2019.
The company may also increase its capital expenditure on the unit and it has indicated that it is prepared to hire more game developers in emerging markets.
Last year, SEA had raised $575 million via a convertible note offering. The company had then said that strong demand from investors had led it to increase the offering size from its initial target of issuing $400 million worth of convertible senior notes due 2023.