Sea, one of the major technology businesses in south-east Asia, is considering a move into Indonesia's insurance industry as it competes with regional "super app" rivals for supremacy in one of the world's fastest-growing sectors.
According to two individuals familiar with the deliberations, the Singapore-based corporation has drawn up plans to purchase an insurance company in Indonesia, the region's largest economy and largest digital market.
One of the sources stated that Asuransi Mega Pratama, a company recently bought by one of Sea's business partners, was a possible target and would clear the way for Sea's entry into Indonesia's $5bn-plus general insurance market.
Such an acquisition would enable Sea to compete more effectively with competitor "mega apps" like Grab and GoTo, which aim to provide a one-stop shop for financial and technological services for millions of customers.
Grab and GoTo already provide insurance to its users and drivers via partners. In some nations, Sea also permits insurers to sell plans using its ecommerce platform.
New York-listed firms Sea has a market valuation of almost $36 billion and has relied mainly on profits from its gaming sector, which has 654 million members.
Its ecommerce, mobile gaming, and digital finance services profited from the epidemic, but the company's share price has fallen more than 60 percent this year, as tech markets have taken a beating and investors have been suspicious of loss-making firms like Sea.
To gain market share, the company's approach has been to invest substantially in promotions such as free delivery and coupons. Five years after going public, the firm has continued to operate at a deficit, incurring an operational loss of $1.5 billion last year.
In a March earnings call, Forrest Li, founder and chairman of Sea, stated that the business expected its digital financial services division to "reach positive cash flow by next year." Along with Grab, the firm got a digital banking license in Malaysia in April.
According to documents filed with the Indonesian government, the insurance Asuransi Mega Pratama was bought early in the year by a corporation owned by Andy Indigo, the son of one Indonesian business tycoon Ganda.
Indigo is also the nephew of Martua Sitorus, the co-founder of Wilmar International, a major agriculture company based in Singapore.
Indigo is Sea's most significant commercial partner in Indonesia, having a nearly 50 percent stake in Sea's digital payments arm in the nation and co-investing in Sea's 2020 purchase of local lender Bank Kesejahteraan Ekonomi.
According to a source with knowledge of the negotiations, Indigo's influence of Mega Pratama paved the way for a takeover by Sea when it is ready to enter the Indonesian insurance market.
Last year, Asuransi Mega Pratama incurred an operating loss of 25.3 billion Indonesian rupiah ($1.7 million).
Multiple nations in Asia, Latin America, and Europe are serviced by the sea. It entered the Indonesian market in 2015 and has since firmly established itself there.
According to research company iPrice, Shopee was the second most-visited ecommerce site in Indonesia in 2021, and its food delivery service was the third most-used in the same year, according consultancy Momentum Works. Payments, consumer loans, and a bank make up its digital financial services in the nation.
Sea refused to comment. Andy Indigo and Asuransi Mega Pratama did not respond to requests for comment.
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