CFA Society Singapore
SINGAPORE (Jan 11): Garena, Southeast Asia’s most valuable startup, picked Goldman Sachs Group Inc. to lead a planned initial public offering that could fetch about US$1 billion ($1.44 billion), according to people with knowledge of the matter.
The Singapore-based online gaming portal and e-commerce provider plans to select additional banks as soon as this month, the people said. Garena is considering listing in the US, the people said, asking not to be identified because the information is private.
If completed, the deal would be a boon for backers such as Tencent Holdings and mark the largest technology IPO out of Southeast Asia. It may open the door for offerings from other local startups, including ride-hailing leader Grab and e-commerce operator Tokopedia.
“This is an extremely significant deal,” said Vishal Harnal, a partner at 500 Startups in Singapore. “Once you have a success story coming out of the region, it becomes easier for others to emulate. An IPO of this magnitude will galvanize and serve as a beacon to all the startups in Southeast Asia.”
The deal would add to the US$9.9 billion in first-time share sales by technology companies globally in the past 12 months, according to data compiled by Bloomberg. Garena, which is also backed by Malaysia’s sovereign wealth fund, would join Japanese messaging provider Line Corp. in selling shares in the US to fund expansion.
Garena was founded by Chinese entrepreneur Forrest Li as an online gaming company in 2009. It has since branched out to add mobile shopping and payment services in Southeast Asia. The firm was valued at about US$3.75 billion when it raised US$170 million in a fundraising round in March 2016. Garena –- a portmanteau of “global arena” -- has grown net revenue 13-fold since 2011 to US$270 million in 2015.
(See also: Game changer)
(See also: Growing beyond games)
Li was born and raised in the Chinese port city of Tianjin and did stints at Motorola Solutions Inc. and Corning Inc. after college. He decided he couldn’t continue as a corporate manager and enrolled in Stanford’s MBA program. He started Garena as Southeast Asia’s version of Tencent and has since become a citizen of Singapore.
Other backers of Garena include Ontario Teachers’ Pension Plan and private-equity firm General Atlantic LLC.
The company aims to complete the IPO in the next two years, one of the people said. Representatives for Garena and Goldman Sachs declined to comment.