Messaging app Line has announced its pricing for its IPO and the company could raise around $1.14 billion.
The Line IPO is being launched in the US and also Japan at the same time, the company has set a price on its shares of ¥3,300.
Background and Market Conditions
Line had delayed establishing its IPO price range in late June as global markets reeled from the impact of the U.K.’s vote to leave the European Union. But the company subsequently raised its target range, indicating that investors are keen on the IPO despite recent market turmoil following the Brexit vote. Line initially had set an indicative price of ¥2,800 for its shares.
Line is offering 13 million new shares in the first section of the Tokyo Stock Exchange and 22 million shares in the New York Stock Exchange. A further 5.25 million shares will be sold through a “green-shoe” option, which allows for the issuance of additional shares if there is exceptional demand.
Significance of the IPO
The shares in Line will start trading this week, on Thursday in the US and on Friday in Japan. This dual listing is significant as it demonstrates Line’s ambition to establish a strong presence in both the Asian and Western markets. The IPO is expected to be one of the largest tech IPOs of 2016, reflecting the growing importance and valuation of tech companies in the global market.
Line’s decision to proceed with the IPO despite the Brexit-induced market volatility underscores the company’s confidence in its business model and growth prospects. The funds raised from the IPO will likely be used to expand its services and user base, invest in new technologies, and possibly make strategic acquisitions.
Line’s Business Model and Future Prospects
Line is more than just a messaging app; it has evolved into a comprehensive platform offering a variety of services, including mobile payments, games, and digital content. This diversification strategy has helped Line build a robust ecosystem that attracts and retains users. The company has a strong presence in Japan, Taiwan, Thailand, and Indonesia, and it aims to expand further into other markets.
The IPO will provide Line with the financial resources needed to compete with other tech giants like Facebook’s WhatsApp and Tencent’s WeChat. By raising $1.14 billion, Line can invest in enhancing its technology infrastructure, improving user experience, and expanding its service offerings. This could include new features like augmented reality, artificial intelligence, and more localized content to cater to diverse user preferences.
Investor Sentiment and Market Impact
Investor sentiment towards Line’s IPO appears to be positive, as indicated by the increased target price range. This optimism is likely driven by Line’s strong user base, revenue growth, and potential for future expansion. The successful IPO could also boost investor confidence in other tech companies considering going public, especially those in the messaging and social media sectors.
Moreover, Line’s IPO could have a ripple effect on the broader tech industry, encouraging more companies to explore public listings. It also highlights the growing importance of tech companies in the global economy and their ability to attract significant investment even in uncertain market conditions.
In conclusion, Line’s IPO is a landmark event that could raise around $1.14 billion, marking one of the largest tech IPOs of 2016. The dual listing in the US and Japan, the company’s diversified business model, and the positive investor sentiment all point to a promising future for Line. As the shares start trading this week, all eyes will be on Line to see how it performs in the public markets and how it leverages the raised funds to fuel its growth and innovation.
Source , TechCrunch
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