Singapore unicorn Sea’s stock has a rollercoaster ride on first day of US IPO

Sea chairman and CEO Forrest Li rings the opening bell to mark its IPO debut on Friday, with NYSE president Tom Farley looking on. Photo credit: NYSE.

Shares of Singapore’s online gaming, ecommerce, and digital payments company Sea had a rollercoaster ride on the first day of its US$884 million IPO on the New York Stock Exchange (NYSE) on Friday.

The stock, trading under the symbol SE (because SEA was already taken by Guggenheim Shipping), opened the day at US$16.25 and rose immediately to nearly US$17. But the price fell to US$14.10 within an hour. It then recovered smartly to trade above US$15 for most of the day, before closing marginally above US$16 at the end.

Source: CNBC.

The Tencent-backed company increased the offer size to 59 million shares from the original 49.7 million shares. Over 35.5 million shares were traded, according to Nasdaq data.

Chinese tech giant Tencent told The Financial Times earlier that it’s likely to subscribe to US$100 million worth of shares. Sea could raise over US$1 billion as underwriters have exercised the option to increase the number of shares.

Ambition to be $100 billion company

Sea chairman and CEO Forrest Li and president Nick Nash on the podium of the New York Stock Exchange on Friday. Photo credit: NYSE.

Sea has three brands under its umbrella: Garena, which is mostly into gaming; ecommerce business Shopee; and digital payments company AirPay. In an interview with Tech in Asia a few months ago, Sea group president Nick Nash spoke about how the three businesses could amount to a US$100 billion company.

“Here’s one way to think about it, in very practical and American terms: there are three companies that our business has a lot of similarity to up in Mainland China. Tencent has roughly US$270 billion in market capitalization. It could be a good proxy for Garena in the video and entertainment space. Alibaba has roughly US$270 billion in market capitalization, very good proxy for us again as Shopee does an open marketplace ecommerce. And then of course Ant Financial has built this magnificent business around payments, product distribution, insurance, and more. It’s hard to say exactly what they are worth, but let’s say US$75 billion,” said Nash.

Taking a 4:1 ratio between the GDP of China and that of the so-called Greater Southeast Asia, including Taiwan where Sea has a presence, the potential worth of Sea works out to over US$100 billion. “So if we were to simply grow into the current potential of those three businesses, it’s an achievable goal,” added Nash.

See: Sea president on how it can become a $100b company and fight giants

Tech IPOs in the US out of Southeast Asia have been rare. Malaysian payments firm MOL got listed on Nasdaq in 2014, but had a poor show, raising US$169 million against the target of US$300 million. It got delisted last year after falling below the minimum bid price.

Sea faces twin challenges after its IPO. Shareholders would want to see the diversification of its business to lead to growth and eventually profitability.

Last year, 95 percent of its revenue came from its online entertainment business, reveals its IPO prospectus.

See: Sea reveals net loss of $196m and revenue of $345m

In its efforts to diversify into ecommerce and payments as well as expand across “Greater Southeast Asia,” Sea’s net loss doubled to US$154 million in H1 2017 compared to H1 2016. Revenue grew modestly by 17 percent to around US$200 million in H1 2017, shows a bottomline comparison between the two periods.

source : techinasia

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