Japanese chat app Line soars in New York-Tokyo dual listing

Fri Jul 15, 2016 6:45am EDT
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TOKYO (Reuters) - Japan's Line Corp (3938.T: Quote) (LN.N: Quote) saw its shares rocket on their Tokyo debut on Friday, extending a strong start in New York the day before, and taking the value of the messaging app firm to $8.6 billion in the year's biggest tech IPO.

The operator of the world's seventh most-used messaging app listed first in New York in a move widely seen as a sign of determination to challenge global peers and eventually expand beyond strongholds of Japan and Southeast Asia.

However, Line's 218 million global monthly active users pale in comparison to the 1 billion of market-leader WhatsApp and 900 million of Messenger, both owned by Facebook Inc (FB.O: Quote). Tencent Holdings Ltd's (0700.HK: Quote) WeChat, which dominates in China, has 697 million.

"We're providing the same kind of services as Facebook and Google, the internet giants of the world," Chief Executive Takeshi Idezawa said at a Friday news conference. "Fighting in the same digital arena as them is extremely important for us."

Line opened at 4,900 yen on the Tokyo Stock Exchange, 48.5 percent above the initial public offering (IPO) price of 3,300 yen, thanks to demand from investors hungry for a rare chance to invest in a tech startup. The stock closed at 4,345 yen.

The Tokyo offering came after Line sold about 70 percent more shares in New York which closed 26.6 percent above the IPO.

"That was a very smooth start," said Hiroyuki Fukunaga, chief executive of financial adviser Investrust. However, its inability to break the psychologically nicer-sounding 5,000 yen before falling back might blunt investor enthusiasm, he said.

Line launched its eponymous app to overcome downed networks in the aftermath of an earthquake and tsunami in 2011, and quickly emerged as Japan's dominant mobile messaging platform. But the firm itself is controlled by South Korean online media provider Naver Corp (035420.KS: Quote) whose stake is now 80.8 percent.

"Line's floating stock is limited, so despite the firm's large market capitalization, the shares could be very volatile," said Investrust's Fukunaga.   Continued...

Line Corp. CEO Takeshi Idezawa poses as he rings a bell during a ceremony to mark the company's debut on the Tokyo Stock Exchange in Tokyo, Japan July 15, 2016.  REUTERS/Issei Kato