Khazanah leads $170m Series D for Singapore's Garena - update

The latest round - which also features China's Tencent Holdings - brings the company's overall funding to more than $500 million. Garena will use the proceeds from the round to build its digital content, e-commerce and online payment platforms, according to Garena Group President Nick Nash, focusing on deepening integration between the three and creating more convenience for users.

"Once you have a payment capability, the potential to build on that and to create even more value for customers, just like Alipay and Tenpay [the payment arms of Alibaba Group and Tencent] have done in China, is pretty compelling," says Nash. "And most importantly, it's something that customers would really find useful and beneficial."

Since its founding in 2009, Garena has sought to build a regional internet platform for Southeast Asia, following the example of Google, Alibaba and Tencent. The company has focused on content, e-commerce and payments as the pillars of its strategy, first establishing a customer base through online gaming and later launching online marketplace Shopee and payments platform AirPay.

AirPay, which lets users pay for goods and services at more than 100,000 retail locations with their mobile phones, is expected to be a major focus for Garena as it offers many opportunities for tie-ins with other offerings. The payment platform already provides backend services for Shopee, and the company sees a wealth of possibilities for further integration.

"Having multiple duplicative apps that do the same thing can be tedious for the consumer," says Nash "In Southeast Asia we have the opportunity to build a unified platform that is just so easy, and then we can shift our time and energy and bandwidth to individuals to figure out what they want to buy, not how they want to buy it."

Garena has grown to more than 45 million users, who spend a collective 1.5 billion hours each month accessing its digital content platform. Shopee, which launched last June, has 650,000 small and medium-sized enterprise (SME) users and an annualized gross merchandise value run-rate of $350 million, while AirPay has an annualized gross transaction value run-rate of more than $330 million.

The company sees a regionwide internet platform for Southeast Asia as a valuable opportunity, but one that has not attracted much attention because of the unique nature of the region. "Southeast Asia is structurally, and I would argue permanently, different than China and India," says Nash. "Southeast Asia is very diverse, and that means it is much more challenging to build the kind of business that Garena has built."

This is Khazanah's first direct investment in Garena. The firm previously had an exposure to the company as an LP in a private equity fund that invested in the business. Tencent has been an investor in Garena since its Series A round. Other backers include Ontario Teachers' Pension Plan - which led a round last May at a reported valuation of $2.5 billion - General Atlantic and Tovio Annus.

The company has also invested in several start-ups itself. Among its portfolio companies are Singapore-based online grocery marketplace RedMart and Vietnamese online food platform Foody.

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• Topics
• Southeast Asia
• Consumer
• Technology
• Expansion
• Singapore
• Khazanah Nasional
• TMT
• Growth capital