Southeast Asian tech giant Sea Limited winding down its investment arm

June 2, 2023 0:32 am

Singapore-based e-commerce and gaming giant Sea Limited is winding down its investment arm Sea Capital, Reuters reported, citing sources familiar with the matter.

The decision to shut down Sea Capital was driven by a decrease in deal activities, which led to fewer investment opportunities. The investment team was reportedly disbanded in May, with team members transitioning to different roles.

The unit itself will continue to exist on paper, as its investments remain valid, said the report.

Sea Capital, which launched in 2021 with an initial capital of $1 billion, focuses on investing in early-stage technology companies in Southeast Asia. It also joined FTX's Series B-1 funding round, which valued the later trouble-ridden cryptocurrency exchange at $25 billion.

Like other growth companies, the Southeast Asian tech giant is feeling the pain of a slowing economy and high interest rates. 

E-commerce platform Shopee, which is also Sea Limited's biggest revenue generator, has scaled back its aggressive expansion strategy since last year and has begun mass layoffs, affecting 7,000 employees. It also closed offices in Spain, France and India.

Sea Limited announced its first-quarter financial results on May 17, with revenue up 4.9% year-on-year to $3 billion. Earnings per share came in at 15 cents, missing analysts' expectations of 53 cents per share. But that's a huge improvement from a year ago, when the company lost 80 cents a share on sales of $2.9 billion.

During the earnings call, Sea Limited's Chief Executive, Forrest Li, emphasized the company's dedication towards optimizing operational efficiency and enhancing user experiences. He expressed satisfaction with the strides made in bolstering the business's fundamentals amidst efforts to fine-tune operations and manage short-term macroeconomic uncertainties.

The economic slowdown hasn't just impacted Sea Limited; other tech giants are also feeling the effects. In recent times, companies like Alibaba and Tencent have declared intentions to decelerate their investment spending.