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Line Prepares for $5.5bn IPO

Tim Maytom

line messaging app
Japanese messaging app Line is preparing for a dual-initial public offering on both the Tokyo and New York Stock Exchanges at a valuation of $5.5bn (£3.9bn) in what is likely to be the largest tech IPO of the year.

The IPO, which is expected to happen in July, is also likely to be the largest IPO in Japan this year, with the firm using the proceeds to fuel expansion both at home and abroad at ta time when growth in user numbers has begun to slow dramatically.

The company, owned by South Korea's Naver Corp, launched its messaging app in the aftermath of the devastating earthquake and tsunami that hit Japan in March 2011, in a bid to aid communication. The app rebranded in 2013 and has expanded into 230 markets, hitting 218m users at the end of March 2016.

The company originally filed for an IPO in 2014, but held off waiting for market conditions to improve. While this hasn't happened, the app is faced with mounting competition from China's WeChat, as well as Facebook's Messenger and WhatsApp, along with slowing user growth.

One advantage that Line does boast, however, is strong revenue growth, which rose 40 per cent last year to $1.1bn. Games, streaming music and comics, all of which can be accessed through the app, accounted for around 41 per cent of this revenue, but the majority came from in-app purchases of stickers and other digital items that are used during chat sessions.

Line is the number one messaging app in Japan, Thailand and Taiwan, with Japanese users accounting for 27 per cent of total monthly active users and 69 per cent of revenue. The company is hoping that the IPO will provide it with the funds to break into markets like the Middle East, where a dominant messaging service has yet to emerge, and secure new audiences.

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