Sea Limited raises US$575m in convertible notes offering

business June 20, 2018 14:38

By The Nation

Sea Limited Wednesday announced the completion of its previously announced offering of US$575 million aggregate principal amount of 2.25% Convertible Senior Notes due 2023 (the “Notes”).

Sea expects to use the net proceeds from this offering for business expansion and other general corporate purposes, including supporting the growth of the Company’s e-commerce platform, Shopee, it said in a press statement.

“With this additional capital further bolstering our balance sheet, we are in an excellent position to continue to capture the significant growth opportunity ahead of us, particularly in the highly promising e-commerce sector where Shopee is already a regional leader,” said Forrest Li, Chairman and Group Chief Executive Officer of Sea. 

“The enthusiastic response to this offering highlights the strength of global investor interest in Sea’s unique position at the heart of our region’s burgeoning consumer growth story, and we believe this convertible notes offering is a highly cost-effective means for us to tap into this demand. We are pleased to deepen our engagement with several of our existing investors through this transaction, and to partner with a number of new investors who share our excitement in the potential of our region and recognize Sea’s unrivaled leadership.”

Li continued: “Shopee is scaling rapidly, ahead of our already ambitious expectations, and benefiting from ever improving cost efficiencies as it grows. We intend to continue to invest in extending our leadership position in e-commerce, and in providing new and innovative services that will ensure buyers and sellers across the region enjoy a superior e-commerce experience on Shopee.” 

Shopee has grown rapidly over the last year and in the first quarter of 2018 recorded gross merchandise value (“GMV”) of US$1.9 billion, representing an increase of 199.5% year-on-year from the first quarter of 2017. The Company recently raised its guidance for e-commerce GMV for the full year of 2018 to a range between US$8.2 billion and US$8.7 billion, representing 99.4% to 111.5% growth from 2017. Sea had previously predicted that e-commerce GMV would be between US$7.5 billion and US$8.0 billion, representing 82.4% to 94.5% growth, the statement added.

Shopee is also benefiting from improved cost efficiencies as it expands, with sales and marketing expenses at Shopee in the first quarter of 2018 falling both in absolute terms and as a percentage of GMV, compared to the fourth quarter of 2017. In the first quarter of 2018, Shopee’s sales and marketing expenses were 6.6% of GMV, compared to 8.5% of GMV in the fourth quarter of 2017.

In recent quarters, Shopee has also introduced a number of value-added services to improve the e-commerce experience for the platform’s fast growing seller base across the region. These include ‘Service by Shopee’, which gives sellers a choice of value-added services such as inventory management, online store operations, and fulfilment services, and ‘Shopee Logistics Service’, which is tailored to sellers with complex logistical requirements such as cross-border fulfillment.