Singapore Sea prepares to enter Indonesian insurance industry

Sea, one of Southeast Asia’s biggest tech companies, is gearing up for a foray into Indonesia’s insurance industry as it battles regional “super app” rivals for dominance in one of the world’s fastest-growing markets.

The Singapore-based company has drawn up plans to acquire an insurance company in Indonesia, the region’s largest economy and largest digital market, according to two people familiar with the matter.

A possible target is Asuransi Mega Pratama, a group recently acquired by a business partner of Sea, which would pave the way for entry into Indonesia’s more than $5 billion general insurance market, one of the people said.

Such an acquisition would allow Sea to better compete with its competitors”super app”, such as Grab and GoTo, which aim to provide millions of users with a one-stop shop for financial and technology services.

both Grasp GoTo already provides insurance for users and ride-hailing drivers through partners. In some countries, Sea also allows insurance companies to sell policies on its e-commerce platform.

New York-listed Sea, with a market value of more than $36 billion, relies heavily on revenue from its gaming business, which has 654 million users.

Its e-commerce, mobile gaming and digital financial services have benefited from the pandemic, but technology stocks have been battered as investors become increasingly wary of loss-making companies such as Sea, whose shares have plunged more than 60% this year.

The company’s strategy has always been spend huge sums of money Promotions like free shipping and coupons to gain market share. Five years after going public, the company is still in the red, with an operating loss of $1.5 billion last year.

Forrest LeeSea’s founder and chairman said on an earnings call in March that the company expects its digital financial services unit to be “cash flow positive over the next year.” In April, the company received a digital banking license in Malaysia along with the likes of Grab.

Insurer Asuransi Mega Pratama was bought earlier this year by an entity owned by Andy Indigo, the son of Indonesian business tycoon Ganda, who has only one name, according to documents filed with Indonesian authorities.

Indigo is also the nephew of Martua Sitorus, the co-founder of Wilmar International, a large agribusiness in Singapore.

Indigo is Sea’s most important business partner in Indonesia, holding a nearly 50% stake in Sea’s digital payments arm in the country and co-invested in the acquisition of local bank Kesejahteraan Ekonomi in 2020.

Indigo’s control of Mega Pratama sets the stage for Sea’s acquisition as it prepares to enter Indonesia’s insurance market, a person familiar with the talks said.

Asuransi Mega Pratama posted an operating loss of 25.3 billion rupiah ($1.7 million) last year.

Sea operates in several countries in Asia, Latin America and Europe. It entered the Indonesian market in 2015 and has since established a firm foothold in the country.

Its e-commerce unit, Shopee, was the second most-visited e-commerce site in Indonesia in 2021, according to research firm iPrice, and its food delivery service was the third-most-used e-commerce site in the same year, according to consultancy Momentum Works. Its digital financial services in the country cover payments, consumer lending and banking.

Hai declined to comment. Asuransi Mega Pratama and Andy Indigo did not respond to requests for comment.

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