NYSE-listed Sea raised a whopping US$6.9bn from South-East Asia’s biggest equity-related offering, showing the world that the region’s fast-growing technology companies could be the next big thing when their Chinese counterparts were losing favour.
The Singapore-headquartered e-commerce giant raised US$4bn from a primary follow-on and US$2.9bn from a convertible bond in September in one of the biggest ECM deals last year and the largest ever dual-tranche offering by an Asian ADR company.
The deep liquidity in the US market and an investor base with better understanding of technology have been driving technology giants from Asia, mostly from China, to list there.
Sea’s transaction shows the US market is also wide open for the right South-East Asian companies.
The deal came at a time when China had stepped up scrutiny over its technology giants. With many US institutions reducing their exposure to China amid an apparent paradigm shift in government regulation, investors were looking at high-growth alternatives in the region.
Sea, as the third-largest internet company outside the US in terms of market capitalisation at the time, just behind China’s Tencent Holdings and Alibaba Group Holding, seized the chance and caught the perfect market window.
The deal immediately grabbed the market limelight in the absence of big Chinese tech deals, drawing upbeat demand from investors and allowing Sea to complete the largest capital raising by a South-East Asian company.
Founded in Singapore, Sea, in an unusual move, went for a US$1bn US listing in October 2017 at US$15 per share. Its shares were up 73% last year before the deal was launched at US$343.80 but that earlier price appreciation did not stop investors from joining the transaction at a hefty premium.
Supported by strong demand, Sea sold 11m primary American depositary shares at US$318 per share, representing a 7.5% file-to-offer discount.
The five-year CBs were marketed at a coupon of 0%–0.5% and a conversion premium of 50%–55%. The final coupon was set at 0.25% and the premium at 50%.
Both the placement and the CB were significantly oversubscribed with high quality and sizeable participation from long-only investors, sovereign wealth funds and technology, media, and telecom specialists.
The secondary performance was good enough to exercise a 15% greenshoe for both parts.
Sea plans to use the proceeds for business expansion and other general corporate purposes, including potential strategic investments and acquisitions.
Goldman Sachs, JP Morgan and Bank of America were the bookrunners.
The success of Sea, which owns popular e-commerce site Shopee and gaming company Garena, in the US market has emboldened more South-East Asian issuers to tap that market.
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