Published: Sat, July 16, 2016
Economy | By Melissa Porter

Line IPO becomes biggest tech listing of 2016

Line IPO becomes biggest tech listing of 2016

Reflecting keen interest among investors in the year's hottest tech IPO, the oversubscription ratio reached the high-20s multiple range among non-Japanese investors. There is an overallotment option for an additional 5.25 million ADSs.

Content here includes payments users make in-app for games, like Line Music and Line TV.

Shares in Line rocketed in their first day of trading on the NYSE.

"It has so far struggled to get out of the markets of Japan, Thailand, Taiwan", Mr Milroy explains.

The underwriters for the offering are Morgan Stanley, Nomura, JPMorgan, Goldman Sachs and Goldman Sachs Japan.

Line has roughly 218 million monthly unique users, and while it's growing, it's still dwarfed by more established competitors like WhatsApp with 1 billion monthly active users and Facebook Messenger with 900 million active monthly users.

The company also warns that investors shouldn't read into trends from the past, because it expects future growth to depend on attracting new users and boosting marketing, among other measures. The concerns haven't seemed to affect investor attention though, with Line's IPO expected to raise more than $1 billion from the offering. The company posted a profit of $2 billion yen in 2014, but swung back to a loss in 2015, with a net loss of $7.97 billion yen, or $71 million. In the USA, 12 percent of internet users are active on Line, according to Global Web Index data.

Stickers-larger, more complex emoji that users can send in the app-are one of the key components of Line's revenue, with users sending an average of 389 million stickers a day in March.

Revenue rose just 19% in the first quarter, according to the company's F-1 filing with US securities regulators. Line is one of the "pioneers" of the sticker movement, according to the filing. There's also money coming in from advertising. Line will be just the fifth tech company to go public this year, as many others have chose to put off going public given the market's volatility.

Providing all services globally will be costly, and driving revenue from sticker sales is more suited to a Japanese user base, so it's hard to imagine replicating that relatively niche success in other markets. "As a result, Naver Corp. will continue to be able to influence or control matters requiring approval by our shareholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions", Line said in its prospectus. It later evolved to include portal services, or online sites that provide access to the web.

Naver Corp. now owns 100% of the company's outstanding shares and will have about 83.3% of the voting power after the offering.

"I use Line regularly; many people do". Line launched an online marketplace called Line Mall in 2013, but shut it down in May "due to our lack of experience in online marketplace operations".

Sales crossed $1 billion for the first time in CY15, of which more than 40% came from in-app purchases in the social games. The company intends to broadcast user messages from Times Square billboards, and attendees will be treated to visits from Line's cartoon bear and rabbit mascots - Brown and Cony.

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