Line Aims To Raise $1.3B in July IPO Despite Brexit Volatility

, ,
Line aims to raise $1.3 billion

The launch of Line’s pop-up store, with its popular bear and rabbit characters in New York City is an effort to give exposure in the West. Source: PR Newswire

Thailand’s  most popular chat app Line is aiming to raise $1.3 billion in a dual Tokyo-New York IPO listing in July, meaning that the company is sticking to its pre Brexit target, the Financial Times reports. It has set a price range between 2,700 and about $26.50-$31.50 per share.

It announced earlier this week that it plans to sell 35 million shares, putting Line on track for the largest IPO in the global technology sector of this year.

The global equity sell-off and price volatility following the UK’s exit from The European Union have cast a dark cloud over Line’s IPO plan, especially at a time when investors were already doubting the company’s growth prospects. Despite investors’ uncertainty, the company is still confident that it should be able to raise $1.3 billion.

This news comes after a two year delay in Line’s initial listings schedule. Fund managers have commented that investor interest in technology startups have lessened and wavered with intensified risk as a consequence of the Brexit vote. Although LINE does not have presence in Europe, this follows the global reaction trend of the fallout.

The risk tolerance of investors has declined in the post-Brexit market volatility. It is also hard to put a premium on Line’s growth potential. – Ikuo Mitsui, Fund Manager at Aizawa Securities

The social messaging app’s  dominance in Japan and Thailand is seemingly not enough to convince global investors of the company’s growth potential. With many competitors in the market, this makes it harder to evaluate potential growth rate. Two-thirds of Line’s 218 million users come from Japan, Taiwan, Thailand and Indonesia, but it is not a major player in Indonesia. Line’s struggle to penetrate the US and European markets has often been brought up by industry analysts and investors.

Line’s effort to establish a name outside Asia and take on rivals, such as Facebook, is reflected in the company’s goal to sell 63% of shares in New York. The company should not be too complacent with its place in Asia, as Facebook is making a push in the region, emphasized by the announcement that it was testing social commerce platforms in Thailand, an area which is also being facilitated through Line.

Excerpts from the Financial Times on June 27. Read the full article here.