Two sources with knowledge of the subject said Southeast Asian e-commerce and gaming giant Sea Ltd (SE.N) is closing down its investment unit amid a cooling investment environment internationally as macroeconomic and market uncertainty weighs on valuations.
One person claimed Sea Capital suspended fresh equity investing in 2022 when leadership changed in May, and Sea itself is investing less, given market conditions.
Sea, owner of Shopee and Garena, did not comment. The people with knowledge declined to be identified because they were not authorized to speak to the media.
Sea’s decision to close the two-year-old arm comes amid increased lending rates and economies recovering from the COVID-19 pandemic.
Refinitiv data indicated that private equity-backed IT mergers and acquisitions totaled $78 billion this year, down 35% from last year.
The statistics indicated $5.8 billion in Asia ex-Japan deals, down 67% year-over-year and the lowest since 2017.
After buying Hong Kong’s Composite Capital Management, created by former Hillhouse Capital partner David Ma who became Sea’s chief investment officer, Singapore-based Sea formed Sea Capital in March 2021 with $1 billion in capital.
New York-listed In last month’s results briefing, Sea announced that Ma had joined the board of directors and resigned as CIO.
One person said Sea Capital closed due to “less deal activity” and fewer investment opportunities.
In May, Sea Capital’s team was disbanded. However, the arm’s investments will keep it alive on paper.
Sea Capital invested in FTX in 2021. However, after FTX filed for bankruptcy in November, other investors had to write down their investments.
Sea, Southeast Asia’s largest listed tech giant, launched a reorganization last year, downsizing its workforce by 7,000 people, or 10%, and freezing compensation as its market capitalization fell to $32.54 billion from an early -2016 high of over $200 billion.
After abandoning India, Europe, and other Latin American countries, the 14-year-old company made its first quarterly net profit in December.
Sea’s share price is up 10% this year compared to the NYSE composite index’s 2% drop.
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