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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