Sea is looking to boost war chest with $500m capital raise

Sea listed on NYSE / Photo credit: NYSE

More fundraising is on the horizon from Singapore-headquartered internet and gaming firm Sea, as the company announced a plan to offer US$400 million in convertible notes. After a new announcement, the offering will be priced at US$500 million.

An unnamed affiliate of Tencent, Sea’s largest shareholder, is expected to buy up to US$50 million of those notes, while “an entity affiliated with one of the company’s directors” is expected to purchase up to US$30 million.

Convertible senior notes issued by a company are debt securities that can be turned into equity in the company after a predetermined amount of time. Holders of senior notes have priority claim in the assets of the company in the event of bankruptcy.

Sea’s stock has enjoyed a boost in the last month, since the company published its Q1 2018 results. The group’s total adjusted revenue grew by 81 percent year-on-year, buoyed by its ecommerce platform Shopee.

On the flipside, it reported losses of US$216 million, up from US$73.1 million during the same period last year. Sea’s gaming arm Garena reported slowing revenue and flat user growth, which has some analysts concerned.

Shopee is expecting a gross merchandise volume of between US$8.2 billion and US$8.7 billion in 2018, an increase of 99.4 percent and 115.5 percent from 2017’s figures.

Sea had a war chest of around US$1.17 billion as of Q1.

Update, 14/6, 5pm: The story has been updated to reflect that Sea prices the convertible note offering at US$500 million.