INSUBCONTINENT EXCLUSIVE:
Alibaba is about to get a jolt from its largest rival in Southeast Asia
Sea, the Nasdaq-listed business, is raising as much as $1.5 billion from a new share offering that’s sure to be funneled into its Shopee
e-commerce business.Singapore-based Sea said in a filing that it plans to offer 60 million American Depositary Shares (ADS) at a price of
That could raise $1.35 billion, but that number could increase by a further $202 million if underwriters take up the full allotment of 9
million additional shares that are open to them
If that were to happen, the grand total raised would pass $1.5 billion
(Shopee raised $500 million in a sale last year.)Sea said it would use the capital for “business expansion and other general corporate
purposes.” That’s a pretty general statement, and its businesses span gaming (Garena) and payments (AirPay), but you would imagine that
Shopee, its primary focus these days, would be the main benefactor.The $22.50 price represents a discount on Sea’s current share price —
$24.06 at the time of writing — and the timing sees Sea take advantage of a recent share price rally
The company last month announced its end of year financials for 2018, which included positive progress for Shopee and Garena.Whilst it
remains unprofitable, Shopee saw annual GMV — total e-commerce transactions, an indicator of business health — cross $10 billion for the
first time, growing 117 percent in the fourth quarter alone.Those green shoots were met with enthusiasm by investors, as trading drove the
stock price to a record high since its October 2017 IPO
That, in turn, made founder Forrest Li a billionaire on paper and gave Sea a market cap of more than $8 billion.Shopee shares have rallied
after its 2018 financial report showed signs of promising growth for its Shopee e-commerce businessThe capital is very much needed, however,
as Shopee is some way from profitability and that is dragging down Sea’s overall business.While adjusted revenue for Shopee increased by
more than 1,500 percent last year, it represented just over one-quarter of Sea’s overall $1 billion income in 2018 and contributed heavily
to the parent company’s net loss of $961 million
Shopee alone posted an $893 million net loss in 2018.Shopee is up against some tough competitors in Southeast Asia, most of which have
Those include Alibaba’s own AliExpress service, Lazada — the e-commerce service it acquired — and Tokopedia, the $7 billion-valued
Indonesian company that counts Alibaba and SoftBank’s Vision Fund among its backers.Sea claims to be the largest e-commerce firm in
“Greater Southeast Asia” — a classification that includes Taiwan alongside Southeast Asia — although direct comparisons are not
possible because Alibaba doesn’t provide detailed information on its e-commerce businesses outside of China.Alibaba said its international
e-commerce businesses — which include many other services beyond Lazada — made $849 million in revenue during its most recent quarter,
an annual increase of 23 percent
Lazada is in the midst of a transition — it appointed a new CEO in December — that has included a move away from direct sales
Alibaba said that impacted growth, with GMV rates slowing, but it pledged to continue its focus, having invested a fresh $2 billion into the
business last year.“We continue to invest resources to integrate Lazada’s business and technology operations into Alibaba with the aim
of building a strong foundation for us to extend our offerings in Southeast Asia,” it said.
