LINE to go public in US, Japan

Naver says ‘time is ripe’ for public listing of LINE

By Kim Yoo-chul

After a delay of more than two years, global messaging application LINE, owned by Korea’s dominant web portal Naver, will go public in Japan and the U.S.

"LINE will be listed in Tokyo on July 15 and New York on July 14," a company spokesman said. "We would sell 13 million new shares in Japan and 22 million shares overseas for an indicative price of 2,800 yen each."

LINE, which is regarded as the Asian version of Facebook, plans to raise up to $1 billion from the dual listing, valuing the portal at about $5 billion.

The listing will be the world’s largest initial public offering (IPO) this year. Given LINE’s relatively weak profile in the United States, unlike its strong foothold in Asia and Europe, Naver hopes to receive more than half the money from investors in the U.S.

Naver officials rejected claims the IPO plan is a bit too late, saying the delay is in line with its strategy to maximize shareholder value.

“The time is ripe,” a Naver official said. “We don’t think we are too late.”

Naver’s shares ended at 720,000 won on the Seoul bourse, Friday.

LINE filed an application to list on Tokyo in July 2014, when the mobile messaging application company was valued at 10 trillion won, or some $9.2 billion.

Critics said the problem with LINE is slower growth in monthly active users, which has stagnated around 200 million, according to analysts.

In a filing to the Korea Exchange, LINE’s net profit last year was 767 million won from 125 billion won it generated a year earlier, raising questions about the company’s sustainability.

Mixed outlook

Analysts are mixed on whether LINE’s IPO plan will be successful because the landscape in the messaging application business has changed.

“We are positive about the timing and the confirmation by Naver of the dual IPO plan, which will cut uncertainty; therefore, our ‘buy’ rating on Naver hasn’t been changed,” analyst Kim Chang-kwon at Mirae Asset Securities said, adding the brokerage maintains 700,000 won as its target on the web portal.

Kim said the listing will help Naver invest more in new businesses.

“Naver is doing very well operating the online-to-offline (O2O) platform business as major local department stores and outlet channels have joined with the portal,” Kim said. “Other O2O services based on location-based searching content will roll out as planned. This will be a boon for the portal to diversify its revenue streams.”

But LINE should tackle losing momentum in some of its sub-businesses and has been urged to release “localized content” to appeal more to consumers in its target markets.

LINE depends heavily on Japan, Taiwan, Thailand and Indonesia, countries where the popularity of K-Pop and related content is solid. The countries account for about 70 percent of monthly active users.

Meanwhile, LINE’s key rivals ― Facebook, WeChat and TenCent ― are enhancing their services as “lifestyle business platforms.”

LINE generates most of its sales by selling stickers and in-application games. Recently, LINE accelerated efforts to combine its existing single content into a platform that will be helpful in the daily lives of users.

“These efforts will be very time consuming,” said a local fund manager who has invested millions of dollars in Naver stock.

For example, Naver closed the MixRadio service early this year after buying it from Microsoft, losing about 115 billion won.

The LINE BIZ Plus service suffered a 11.8 billion won net loss last year, while Naver dropped its “LINE MALL” business ― an open-market application aimed at expanding its presence in Japan’s e-commerce sector ― three years after the service’s launch.