Line Corp of Japan is headed for what could turn out to be the biggest initial public offering this year for a technology company as it includes making a major pitch to investors in the US. The company is behind one of the most popular messaging apps in Asia and it plans to go public in mid-to-late July in New York and Tokyo. It is their goal to raise somewhere between $1 billion and $2 billion at a valuation of $5 and $6 billion. It is in the plans of the Tokyo-based firm to get at least half of this figure from American investors as it is planning to make a long term expansion in the country after making a further push in Southeast Asia.
Line is already earning profits and this will make it the primary focus of investors later this month when they begin their roadshow. If Line is able to reach the goals it has set out, it will become the biggest tech offering for this year globally. So far in 2016, no business in a technology IPO has managed to raise more than $150 million even though nearly 160 private companies currently have a valuation of $1 billion or higher. This debut in the market will come two years after an application was filed by Line for getting listed in Tokyo in July, 2014.
In that offering, the valuation of the company had been about $9.2 billion. However, a deal wasn’t made and the chief executive officer was later replaced by the company. Naver Corp of South Korea controls the company and its shares have been 7.4% higher this year. The lower valuation for the expected listing of the company next month is an indication of the slowing user growth of the app and a cooling in technology listings and valuations. In the first quarter of 2016, global technology companies had managed to raise about $900 million, which is $6.5 billion less than the same quarter in 2014 and $2.8 billion less than last year’s quarter.
The biggest tech listing of this year is WiseTech Global Ltd. of Australia, which is a logistics software firm that raised approximately $30 million in April. According to people familiar with the matter, the lead underwriters include Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co and Nomura Holdings Inc. Late in the previous year, lots of high-profile startups had their valuations reduced in the private market as expectations were lowered by investors including Fidelity Investments about the profitability of young tech companies.
Fidelity had raised its outlook in recent months for certain tech startups, which include Snapchat Inc., but it also lowered expectations for others like Dropbox Inc. Led by 24-year-old Takeshi Idezawa, Line is hoping to stand out in the crowd by focusing on its profitability in the upcoming roadshow. People familiar with the matter said that the company is way past the point of break-even. In 2015, it had reported a revenue of 120 billion yen, which was a 40% increase from 2014.