Japan WhatsApp Rival Line Prices Potential $1.1 Billion IPO
June 28 2016 - 01:50AM
Dow Jones News
TOKYO—Japanese messaging-app operator Line Corp. has set its
price range for an initial public offering in Tokyo and New York
next month at 2,700 to 3,200 yen ($26 to $31) a share, according to
a person familiar with the matter.
This sets the stage for an IPO that could raise up to ¥ 112
billion ($1.09 billion) and making it one of the biggest tech
listings so far this year.
Line is offering 13 million new shares to the public in Japan on
July 15, and an additional 22 million new shares in New York on
July 14. A further 5.25 million shares could be sold through a
green-shoe option.
At the top end of the price range, the offering could be valued
at up to ¥ 129 billion, if all additional shares are sold.
The range gives Line a valuation of 20 to 24 times price to
earnings, the person familiar with the matter said.
Line's IPO comes at a time when markets are experiencing
turbulence following Britain's vote to exit the European Union. The
IPO price range had been originally slated to be announced Monday,
but it was delayed and is slated to be revealed later Tuesday, as
markets continued to reel from the aftershock of Brexit.
The company, however, has said there has been no change in its
IPO plans, and that the final price will be set on July 11. Line
had previously set an indicative price of ¥ 2,800 for its
shares.
Owned by South Korean internet company Naver Corp., Line
currently boasts 218 million monthly active users and operates
Japan's most popular mobile messaging app. It provides free voice
calls and messaging, and generates revenue from sales of digital
stamps, games and advertisements. In recent years, Line has
expanded to provide other services including streaming music and
taxi hailing as it competes with bigger rivals like Facebook Inc.'s
WhatsApp and Tencent Holdings Ltd.'s WeChat.
Line's offering comes at a time when technology IPO markets are
in the doldrums, and it will serve as a test of investors' appetite
for tech companies.
Masayuki Kubota, chief strategist at Rakuten Securities Economic
Research Institute, said he expected a relatively strong IPO demand
for Line, considering its huge popularity in Japan.
"But from an analyst's perspective, there are questions about
its growth prospects. And in the U.S., where there are already
similar services, it could face more difficulty generating demand
in the long term, and the current turbulence in the markets won't
help," he said.
Born in 2011 as a free chat app, Line has grown into a
social-content platform, which generates revenue thanks to the
stickiness of its core messaging service that features cute cartoon
stickers.
The app is wildly popular among the youth in Japan and revenue
of its core app business has grown to around Y120 billion last
year, although user growth has been slowing. In a bid to establish
new sources of revenue and attract more users, Line announced in
March that it would launch a host of new services, including a
low-cost mobile carrier, and expand its mobile-payment service.
Line's IPO comes two years after it first submitted an
application to list on the Tokyo Stock Exchange as part of an
offering that was expected to have valued it at more than $10
billion. But it postponed the offering and backed out of a possible
IPO the following year.
The IPO will likely be one of the biggest in Japan since Japan
Post Holdings and its two financial units fetched around $12
billion in November.
Write to Alec Macfarlane at Alec.Macfarlane@wsj.com and
Alexander Martin at alexander.martin@wsj.com
(END) Dow Jones Newswires
June 28, 2016 01:35 ET (05:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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