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Line messaging app plans multi-billion dollar IPO

Fri 4 Mar 2016

Line messaging

Sources close to Line Corporation, operator of the popular Line messaging application, confirmed today the company plans to go public with an initial price offering of up to $3 billion in Tokyo and New York. The Line app, which offers free text messaging and voice calls from mobile devices as well as PCs, is one of the most popular mobile messaging applications worldwide, with over 200 million monthly active users.

The listing, which would take place jointly on the Tokyo Stock Exchange and either the NYSE or NASDAQ is planned for summer 2016. Financial giants Morgan Stanley, JP Morgan, Goldman Sachs and Nomura are working together on the IPO.

Line messaging was created in 2011 as a response to the devastating Tohoku earthquake, which damaged telecommunications infrastructure. Employees at NHN Japan, a division of South Korea’s NHN Corporation, developed Line as an internal work-around to provide communications in Japan while the country’s communications infrastructure was rebuilt. The app was released to the public a few months later, and proved incredibly popular with over 200 million reported users in the first two years after release. Line Corporation was created as a spin off company of NHN Korea (later renamed Naver, operator of South Korea’s largest web portal) to manage the Line messaging business alone. In 2013, Line released additional services including a ‘Timeline’, which effectively created a social media sharing platform for Line subscribers, similar to Facebook.

Line also added a feature called the Sticker Shop, where users can purchase stickers to send to other users of the app. They began allowing users to create and sell their own Line stickers, which resulted in over 390,000 independent creators signing up to sell their Line stickers, generating revenue of almost 9 billion yen, or 78 million US dollars, in the first year alone.

Line also joined in the ‘zero knowledge’ encryption trend last year, with a feature called Letter Sealing, after the security of its messaging application was criticized in 2013.

In August 2015, when asked about a possible IPO for Line Corporation, Naver CFO Hwang In-joon said that the markets at the time were too unpredictable to give a solid timetable for the listing. Line Corporation suffered from falling advertising revenues at the time. Hwang said that second-quarter results were not optimal for the valuation of the company at an IPO. “When choosing when to go to market, we need to consider whether we’ll take our second quarter performance results with us, or third quarter or fourth quarter results.” With revenue holding steady at 30 billion yen for third and fourth quarter 2015, the time finally seems right for Line Corporation to go public.


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