Southeast Asia’s Most Valuable Startup Running Toward an IPO
Garena headquarters in Singapore (Photographer: Nicky Loh/Bloomberg) 

Southeast Asia’s Most Valuable Startup Running Toward an IPO


(Bloomberg) -- Li Xiaodong was attending a college English class when the American lecturer asked each student to come up with a Western name. Many chose Michael, after the basketball superstar Michael Jordan. When his turn came around, the shy youth picked Forrest -- as in Gump.

That alias would come to define the self-professed outlier who now oversees Garena, an online gaming portal and e-commerce provider that is now Southeast Asia’s largest startup. Forrest Li, as he’s now known, saw himself in Tom Hanks’ Oscar-winning portrayal of the fictional big-hearted Alabamian who, unbeknownst to most, shaped some of the most momentous events of the 20th century. 

Southeast Asia’s Most Valuable Startup Running Toward an IPO

Forrest Li

Photographer: Nicky Loh/Bloomberg

Born and raised in the port city of Tianjin by state-company lifers, he enrolled at a Shanghai University in his teens, arriving in a big city teeming with flashy people who spoke an unfamiliar dialect. Shell-shocked, he spent most nights playing games at an internet cafe till dawn. Now, Li runs the Singapore-based startup that’s valued at more than $3.75 billion.

“Our aspiration is to build Garena into a $100-billion consumer company in 10 years,” the still soft-spoken Li, 39, said during a rare interview in his office. Garena is shooting for a U.S. initial public offering in two to three years, with possibly a secondary listing somewhere in Southeast Asia.

At the company’s headquarters, hundreds of employees hunch over flickering screens in library-like silence at the offices of its mobile-shopping division, a cavernous space the size of a football field. People slide into soundproof booths for quick confabs. They seek out solitary sleep pods for a nap or quick massage.

Southeast Asia’s Most Valuable Startup Running Toward an IPO

Garena headquarters

Photographer: Nicky Loh/Bloomberg

That’s about to change. Those hushed digs belie the frenetic pace of an entertainment machine modeled on Chinese backer Tencent Holdings Ltd. Leading that charge is Nick Nash, Li’s gregarious polar opposite and a private equity veteran brought in less than two years ago to assume the company’s public face.  

Established in 2009, Garena found early success in Singapore with the help of investor and mentor Tencent. Starting out as an online gaming company, it quickly grew into one of the biggest companies in regional retail and payments. Garena –- a portmanteau of “global arena” -- has grown net revenue 13-fold since 2011 to $270 million in 2015. That’s a compounded annual growth rate of 95 percent, according to Nash.

Garena’s journey toward a market debut now involves spreading the word. “We’re learning how to do this better,” said Nash, who’s fast becoming a regular on the Asian tech-conference circuit.

Southeast Asia’s Most Valuable Startup Running Toward an IPO

Nick Nash

Photographer: Ore Huiying/Bloomberg

Other priorities include shoring up Shopee and AirPay, Garena’s recently introduced mobile marketplace and payments services. They’re targeting a region with 620 million consumers on the cusp of an online shopping boom. That promise has drawn myriad competitors: Tokopedia, Orami, backed by Facebook Inc. co-founder Eduardo Saverin, and Carousell, to name a few. Alibaba Group Holding Ltd. is moving into the region through just-acquired Lazada Group SA.

One thing in Garena’s favor -- few offer the shopping-payments-entertainment composite that’s served Alibaba and Tencent well. Since Shopee debuted in seven languages in June 2015, it’s become the region’s fastest-growing mobile marketplace, according to Nash. Modeled on Alibaba’s Taobao, its annual gross merchandise volume, the total of all e-commerce transactions, reached about $1.13 billion based on a July run rate.

The company has raised more than $500 million, most recently a $170 million series D in March. Dan Kiang, a Hong Kong-based director for the Ontario Teachers’ Pension Plan, asked Li before signing a check in 2015: “Forrest, you sure you’re not going to mess up, right? This is hard-earned pension money of teachers in Canada,” Li recalled. He said he replied: “Don’t worry. We Asians never disappoint teachers.”

Southeast Asia’s Most Valuable Startup Running Toward an IPO

Shopee app

Photographer: Nicky Loh/Bloomberg

Garena, which has raised funds every year since 2014, isn’t in the market for more financing now, Li said. Garena has named some of its 14 conference rooms after its backers. “Antarctica” is a nod to Tencent (its mascot is a penguin) and “Shangri-La,” the owners of the hotel chain. Several members of billionaire Robert Kuok’s family were early backers. Other big-name investors include Keytone Ventures and Khazanah Nasional Bhd., Malaysia’s sovereign wealth fund.

“If Garena is able to execute well, as they have in the past, then there is a significant opportunity for the company to capitalize on the growth we’re seeing across the region,” said Anton Levy, global head of internet & technology at General Atlantic LLC in New York, Nash’s former employer and another Garena backer. 

Yet Li, who later became a citizen of Singapore, remains an enigma beyond investment circles. The soccer fanatic is rarely seen in public, and then almost never without a gray Adidas sweatshirt bearing his embroidered initials, even in Singapore’s sweltering climate. That’s because, during a meeting at the W hotel in Taipei in 2014, he and a score of managers were clad in identical attire when they hammered out the company’s mission.

After stints at Motorola Solutions Inc. and Corning Inc., Li said he thought he couldn’t see himself becoming a corporate manager. He enrolled in Stanford’s MBA program and later attended his then-girlfriend’s graduation ceremony -- the same one where the late Steve Jobs gave his now-famous commencement speech. Li replayed the oration every day for more than two months on YouTube, while deciding to set out on his own. “It gave me the courage to do what I am doing now,” he said. He still calls up the speech when he needs motivation.

Garena now has to grapple not just with competitors but a large swath of Southeast Asia that lacks a proper logistics and banking infrastructure. Not all of its businesses have panned out. BeeTalk, launched in 2013, hasn’t become the WeChat of the region, though it’s become an important part of gaming and mobile shopping services.

Southeast Asia’s Most Valuable Startup Running Toward an IPO

Sleeping Room

Photographer: Nicky Loh/Bloomberg

But the company’s making headway elsewhere. In Indonesia, Thailand and Vietnam, it pioneered a “reverse-ATM” network through which consumers can deposit cash into online wallets from cybercafes and mom-and-pop stores. AirPay, a mobile-payments service that debuted in August 2014, now has an annualized gross transaction value of $510 million, according to Nash.

"The market for wallets in Southeast Asia is fragmented and there is no dominant player yet," said Atul Malik, former CEO of Citibank Hong Kong who currently advises financial-technology startups. "Airpay has a good chance of becoming the best in class pan-Southeast Asia payment service provider"

In May, Li made his way back to Stanford for his 10-year class reunion as a virtual unknown. Seated on a panel alongside other alumni, Li described Garena’s business. When he was done, Adrian Li, a former classmate and founder of Jakarta-based Convergence Ventures, remembers grabbing the microphone and telling the audience: “By the way, guys, Forrest’s company is most likely the most valuable company any of us created.”

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