Japan’s Line Corp is headed for what could be the biggest initial public offering (IPO) for a technology company this year, including a major pitch to US investors.
The company behind one of Asia’s most popular messaging apps plans to go public in Tokyo and New York mid-to-late next month, with a goal of raising between US$1 billion and US$2 billion at a valuation of US$5 billion to US$6 billion, according to people familiar with the matter.
The Tokyo-based company aims to get about half the money from US investors as it plots a long-term expansion there after pushing further into Southeast Asia, the people said, asking not to be identified because the matter is private.
Photo: Reuters
Line is already profitable and it will make that a focus for investors when it begins a roadshow toward the end of this month, one of the people said.
If it reaches its goals, Line would be this year’s biggest tech offering globally, according to data compiled by Bloomberg.
No business has raised more than US$150 million in a technology IPO this year, even though more than 160 private companies 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 company at ¥1 trillion (US$9.2 billion), people familiar with the situation said.
The lower valuation for next month’s expected listing reflects the company’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 same period in 2014 and US$2.8 billion in the first quarter of last year, according to Ernst & Young LLP.
Nomura Holdings Inc, JPMorgan Chase & Co, Morgan Stanley and Goldman Sachs Group Inc are the lead underwriters, according to the people.
Line, led by Takeshi Idezawa, 42, is hoping to stand out by highlighting its profitability to investors during the upcoming roadshow, according to the people, who did not provide specifics beyond saying the company is well-beyond break-even. The firm reported revenue of ¥120 billion last year, growing by 40 percent from the previous year.
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 Inc’s US$7.27 per user and Facebook Inc’s US$11.27 per user for the same period, according to Bloomberg calculations.
Twitter was not profitable when it went public in 2013 and has continued to lose money. Facebook was profitable when it listed in 2012 and reported its second-largest net income on record in the latest quarter. Facebook’s shares have tripled since its IPO, while Twitter is down by more than 40 percent.
At US$5 billion to US$6 billion, Line would be valued at 4.5 times to 5.4 times its sales last year, according to Bloomberg estimates. That is cheaper than Facebook’s price-to-sales ratio of 11.4 times, based on revenue estimates. It is also cheaper than Tencent Holdings Ltd’s (騰訊) 8.7 times ratio, but more expensive than Twitter’s 3.6 times ratio.
Line wants to expand the amount of revenue it gets from advertising, according to one of the people. Ads made up 35 percent of sales in the latest quarter, with another 35 percent coming from content, including revenue from smartphone games. Communications-related products such as digital stickers accounted for about 22 percent.
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