Sea Ltd, an e-commerce and gaming company, said on Monday that it is exiting India's retail sector just months after establishing operations there. This is the second withdrawal this month from a foreign development effort, as the loss-making company faces a bleak growth forecast.
The withdrawal, which takes effect on March 29, comes weeks after Sea's e-commerce subsidiary Shopee announced its exit from France and India banned Sea's famous gaming app "Free Fire."
Following the ban, the market value of Sea, which is listed in New York, fell by $16 billion in a single day, prompting some investors to sell their stakes in the Singapore-based firm.
Shopee stated in a statement that it was withdrawing due to "global market uncertainty" and that it would make the process "as painless as possible."
Sea said earlier this month that revenue growth for its e-commerce division is likely to slow to roughly 76 percent this year from a blazing 157 percent in 2021, due to decreased online transactions and engagements as more nations recover from the epidemic.
"As a result of the market's dramatic move toward growth stocks, all of these e-commerce businesses are under extreme pressure to break even as quickly as possible," said Oshadhi Kumarasiri, an equities analyst at LightStream Research who writes on the Smartkarma platform.
Sea's shares on the New York Stock Exchange slid 3.2 percent to $112.35 in afternoon trade.
The company's shares had already fallen 11% in January following the announcement by Chinese technology giant Tencent (0700.HK) that it would sell 14.5 million shares in the group.
There is no conclusive evidence that the withdrawal from India was motivated by government pressure or other operational considerations, Citi analyst Alicia Yap stated.
Sea's intention to discontinue operations in India was originally reported by Reuters.
Shopee launched its India operations in October 2021 as part of an aggressive worldwide expansion strategy that included expansion across Europe. Sea's market capitalization was as high as $200 billion at the moment. Since then, it has decreased to $64.76 billion in March 2022.
Shopee India's local unit recruited local retailers and created a shopping website and mobile application. Amazon.com Inc and Walmart's Flipkart already controlled India's rapidly rising e-commerce sector.
According to one individual with direct knowledge of the company's thinking, Shopee's decision to quit India was prompted in part by increased regulatory scrutiny, which resulted in the prohibition of Sea's gaming app Free Fire as part of a crackdown on firms suspected of transmitting data to Chinese servers.
Sea had stated in March that it did not transfer or maintain data pertaining to Indian consumers in China.
According to the source, Shopee had planned to invest up to $1 billion in India and that the withdrawal would harm Indian logistics companies with which it had inked lucrative contracts.
When questioned about the statistic, the business stated that it was "not correct," without providing details, and that "the decision involving Shopee India has nothing to do with regulatory problems."
"We are continuing to work on resolving the Free Fire scenario in India," the business noted.
According to Reuters, Singapore officials voiced concerns with India over the restriction in February, citing sources. They questioned why Sea had been singled out.
In India, e-commerce businesses operate in a highly regulated environment. For years, New Delhi has implemented limitations to safeguard tiny brick-and-mortar merchants.
Offline shops in India frequently accuse foreign corporations of skirting restrictions and offering substantial discounts that undermine their company, charges the companies reject. Shopee had received boycott calls from similar businesses in India in previous months.
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