Singapore-headquartered e-commerce and gaming giant Sea Ltd is winding down its investment arm, Reuters reported on Thursday, quoting two people with knowledge of the matter.

The investment arm, Sea Capital, stopped new equity investing in 2022 with leadership moving on in May, while Sea itself is placing less priority on investing given market conditions, one of the people reportedly said.

Sea – the owner of e-commerce platform Shopee and online gaming developer Garena – has yet to respond to TechNode Global‘s query.

The Southeast Asian tech giant’s decision to close the two-year-old arm comes as technology investors – both funds and firms – have held back on investing amid higher interest rates and while economies struggle for growth as they recover from the COVID-19 pandemic. Tech startups are experiencing a “funding winter” and the investment environment globally has been cooler as macroeconomic and market uncertainty weigh on valuations.

One of the people reportedly said the decision to wind down Sea Capital was prompted by “less deal activity” resulting in fewer investment opportunities.

The other person said Sea Capital’s entire team had been disbanded and moved to other roles in May but the investment arm will continue to exist on paper as its investments are “still valid”.

New York-listed Sea launched Sea Capital in March 2021 with initial capital of $1 billion after buying Hong Kong’s Composite Capital Management, founded by former Hillhouse Capital partner David Ma who became Sea Capital’s chief investment officer.

In an earnings briefing last month, Sea said Ma had joined the group’s board of directors and would no longer serve as CIO, according to Reuters.

Sea Capital had made at least three investments, including in 2021 into collapsed cryptocurrency exchange FTX. Other FTX backers such as Singapore state investor Temasek had to mark down their investment to zero after FTX filed for US bankruptcy protection in November, according to earlier reports.

Sea, which is also Southeast Asia’s biggest listed tech firm, began an overhaul of the group last year, cutting its workforce by around 7,000 people, or about 10 percent, and freezing salaries as its market capitalisation tumbled to $32.54 billion from an early pandemic high of over $200 billion, Reuters reported.

In September last year, it was reported that the tech firm’s top management will forgo their salaries and tighten company expense policies, as it tries to shield itself from the economic slowdown. Sea’s e-commerce arm Shopee will exit Argentina and shut local operations in Chile, Colombia and Mexico while its Garena gaming unit will lay off hundreds of staff in Shanghai, according to the report then.

Sea Ltd’s top management to forgo salaries as firm cuts cost – report