HONG KONG (Sept 25): Listed life can be rough. Sea, a Southeast Asian startup formerly known as Garena, has filed for a US initial public offering of up to US$1 billion ($1.35 billion). But larger deep-pocketed rivals are ramping up competition. An IPO at this stage could make the fight to come harder.

See: Sea, former Garena, files for NYSE IPO

Backed by Chinese internet giant Tencent, Sea is one of the region’s biggest homegrown startups. It was valued at US$3.8 billion in a 2016 fundraising. Similar to Tencent, it has built a wider internet platform, which spans retail, payments and messaging, around a profitable gaming business.

For potential investors, Sea’s retail unit Shopee is both cause for excitement and concern. Gross merchandise value, or the value of sales transacted on its platform, is now running at a yearly rate of more than US$3 billion.

Sea says Shopee was number one by GMV in the first half of the year for a region it calls “Greater Southeast Asia” – which oddly includes Taiwan, further to the north. For its part, Alibaba-backed rival Lazada says it was number one in Southeast Asia, as conventionally defined.

Either way, competition is cutthroat and a clear, profitable winner has yet to emerge. All of Southeast Asia’s big e-commerce players are loss-making, Paul McKenzie of CLSA told a media briefing this month. That’s partly due to subsidies used to entice customers and grow market share. He declined to comment on the IPO.

Throwing around the kind of money needed to keep pace can be tricky for a smallish public company. Japan’s Rakuten closed online marketplaces in Singapore, Malaysia, and Indonesia last year because it was wary of absorbing large income-statement losses as a listed company, CLSA said in June. This restricted its ability to spend, meaning it lagged unlisted competitors. Amazon’s recent entry into Southeast Asia compounds the problem. The US$460 billion US giant can spend big to take on local rivals, as it has done in India.

A stock market listing has its perks, including easy access to capital markets. But Sea will have to convince prospective shareholders its shopping business won’t be a drain. Public investors are less accommodating of big losses and repeated cash calls.