Line Plans to go Public with $1.3 Billion IPO
Line Corporation is set for the biggest IPO in the tech sector in 2016. The chat app has priced its IPO at the peak of its proposed range, through which it plans to raise as much as $1.14 billion (115.5 billion yen). It is also open to the option of selling more shares if it notices an increase in the interest of investors after the Brexit decision.
For the IPO, Line plans to sell 35 million shares at a price of $33 per share (3,300 Yen). In its book building range, it has decided to sell its shares for $29–33, according to a filing with the Finance Ministry of Japan. The range was increased from $27–32 as demand for the shares increased in the market, amid news of the IPO.
The company will sell about 35 million shares in the IPO. In the first section, 13 million shares will be sold on the Tokyo Stock Exchange and the rest will be sold on the New York Stock Exchange. Line will also sell an additional 5.25 million shares through the “green-shoe” option, which allows the company to sell additional shares in case of excessive demand.
Shares will be traded on the New York Stock Exchange from Thursday, while trading in Tokyo will start on Friday. If all the shares are sold, along with the ones through the green-shoe option, Line would pocket $1.33 billion from the offering. The IPO was delayed for weeks; the company had first announced it before the UK’s decision to leave the European Union.
The company has been preparing for an IPO for the last two years. It had initially filed for an IPO two years ago, but backed off in the hope of a stronger response from investors. Had it gone public back then, the company would have been valued at $10 billion, as compared to the $6.9 billion it is valued at today, after the offering.
The social app currently has 218 million monthly active users (MAU), out of which 66% are from Japan, Thailand, Indonesia, and Taiwan. Line plans to use the raised capital to establish itself in other regions as well and expand outside its core market to compete with rivals such as Facebook, WeChat, and Telegram.
With Line blocked in China, the company is deprived of a key market that could have possibly helped it lure in new users from the region. The company is famous for providing free voice and video calls to its users. Its major source of revenue is from digital stickers and games that it sells to its users, along with ads. Last year, the company exceeded the $1 billion mark in revenues for the first time since its inception.
However, about 90% of its revenue is generated from its homeland. Owned by South Korean company, Naver, Line has introduced new services in its app over time. These include taxi hailing and music streaming services, which aim to add more revenue sources to its business model.
Editing by Shuaib Ahmed;Graphics by Waqas Khan