Japanese app maker targets this year's biggest tech IPO

If Line Corp, led by chief executive Takeshi Idezawa, achieves its goals, it will provide a rare bright spot for the moribund market for listings.
If Line Corp, led by chief executive Takeshi Idezawa, achieves its goals, it will provide a rare bright spot for the moribund market for listings. PHOTO: REUTERS

Line Corp eyes listing in New York and Tokyo with a goal of raising between $1.4b and $2.7b

TOKYO • Japan's Line Corp is headed for what could be the biggest initial public offering for a technology firm this year, including a major pitch to United States investors.

The firm behind one of Asia's most popular messaging apps plans to go public in Tokyo and New York next month, with a goal of raising between US$1 billion (S$1.4 billion) and US$2 billion at a valuation of US$5 billion to US$6 billion, people familiar with the matter said.

They added that the firm aims to get about half the money from US investors as it plots a long-term expansion there after pushing further into South-east Asia.

Line is already profitable and it will make that a focus for investors when it begins a roadshow towards the end of this month, a source said.

If it achieves its goals, Line would be this year's biggest tech offering globally - according to data compiled by Bloomberg - and will provide a rare bright spot for the moribund market for listings.

No business has raised more than US$150 million in a technology IPO this year, even though more than 160 private firms are currently valued at US$1 billion or more.

The market debut would come two years after Line filed an application to list in Tokyo in July 2014. That offering valued the firm at one trillion yen (S$12.7 billion).

However, a deal did not materialise and the firm, controlled by South Korea's Naver Corp, later replaced its chief executive officer.

The lower valuation for next month's expected listing reflects the firm's slowing user growth and a cooling in technology valuations and listings. Global tech companies raised about US$900 million in the first quarter of this year, down from US$6.5 billion during the same period in 2014, and US$2.8 billion in the first quarter of last year, according to Ernst & Young.

This year's biggest tech listing, so far, is Australia's WiseTech Global, a logistics software firm that raised about US$130 million in April, according to Bloomberg data.

In the private market, several high-profile start-ups had their valuations slashed last year as investors, including Fidelity Investments, lowered their expectations on the profitability of young tech firms.

In recent months, Fidelity raised its outlook for certain start-ups, including Snapchat, but further lowered it for others like Dropbox.

Line, led by chief executive Takeshi Idezawa, 42, is hoping to stand out by highlighting its profitability to investors during the upcoming roadshow. The firm reported revenue of 120 billion yen last year, growing by 40 per cent from the year prior.

It had 215 million monthly active users at the end of last year, implying that, on average, it earned US$5.10 from each user last year, less than Twitter's US$7.27 per user and Facebook's US$11.27 per user for the same period, according to Bloomberg calculations.

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A version of this article appeared in the print edition of The Straits Times on June 07, 2016, with the headline 'Japanese app maker targets this year's biggest tech IPO'. Print Edition | Subscribe