Naver’s Line files for Tokyo IPO

Line Corp., the Japan-based affiliate of South Korea’s Naver Corp. was seen to be preparing for a debut in the U.S. and Japanese stock markets, according to a regulatory filing by Naver on Wednesday.

“We have submitted the related documents to the Tokyo Stock Exchange for a flotation,” Naver said in a regulatory filing.

It also said it may pursue an initial public offering on the New York Stock Exchange or NASDAQ, echoing comments from its chief financial officer Hwang In-joon last year. Yoon Won-shik, a Naver spokesman, said the U.S. listing could come following a listing in Japan. He also said there was the possibility of seeking only a U.S. listing, adding that the details would be disclosed next month. 

The market capitalization of Line, a popular messenger application with more than 480 million users, is estimated to reach 23 trillion won ($22.3 billion) if the firm goes public.

“There are two advantages for Line should it go for an IPO. The first is that it can raise the necessary funds for more aggressive marketing, while the second is it would be reinforcing its brand awareness as a global brand,” said Hwang Sung-bin, an analyst at HMC Investment and Securities.

Analysts stressed the high profitability of the free messenger application stemming from in-app purchases of stickers, emoticons and games. Another significant profit source for Line is the monthly fees it charges retailers and entertainment agencies for signing on to regularly send out promotional messages.

Line was launched in June 2011, and the service is currently provided in 17 different languages, with users not only from South Korea and Japan but also from the United States, Mexico and Malaysia.

According to the company’s financial records, Line’s revenue in the first quarter of this year stood at 145.2 million won, up 115.7 percent on-year. Should it become listed, Line’s market cap is forecast to grow to become equivalent to 84 percent to 105 percent of Naver’s.

Experts believe Line’s stock debut is a part of broader changes sweeping across the global messaging landscape that is led by Facebook’s WhatsApp and Tencent’s messaging platform WeChat in China.

WhatsApp, purchased by Facebook in February at $19 billion, boasts more than 500 million users. The number of monthly active users reached 450 million at the time it was acquired by Facebook.

WeChat, meanwhile, is another fast-growing messenger service provider that expects the total number of users to reach 500 million by the end of the year. WeChat’s owner Tencent said it claimed 396 million monthly active users as of the end of March.

Shares of Naver on Wednesday afternoon edged down 3.4 percent despite news of a possible IPO for Line.

By Suk Gee-hyun (monicasuk@heraldcorp.com)