says no 2014 float for Line, clouding deal outlook
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[September 22, 2014] By
Se Young Lee
SEOUL (Reuters) - Japanese
messaging app operator Line Corp [IPO-LINE.T] will not
list this year, its parent Naver Corp said on Monday,
having been readying a much-anticipated flotation that a
source said could value it at up to $20 billion.
South Korea's Naver said the operator of the Line app, first
developed to overcome communication problems in Japan after the
March 2011 earthquake and tsunami, is still considering whether to
seek a listing, either in Japan, the United States, or both, but
gave no details on possible timing.
A banking source told Reuters in July that Line would likely list in
The decision to hold back follows the record-breaking $25 billion
listing by Chinese e-commerce company Alibaba Group Holding Ltd,
although a successful Alibaba listing had been expected to help
smooth the way for an offering by Line.
"Line's management has determined that now is not the optimal timing
for the initial public offering (IPO)," a Naver spokesman told
Reuters, noting that Line is profitable and that Naver has the
financial capacity to support Line's growth.
A Line IPO would be the first by a major chat app operator.
Naver said in July that Line had applied to list in Tokyo and a
person with direct knowledge of the matter told Reuters on Monday
that the firm has also applied for a New York listing. A banking
source previously told Reuters that Line could be valued at up to
"I think Naver may have believed that Line might not be able to get
the best price from an IPO at this point," said HDC Asset Management
fund manager Park Jung-hoon, adding that Naver shares may drop on
Tuesday given market expectations for a 2014 listing.
Park noted that Naver has yet to provide data on Line's monthly
active users (MAU), the key metric for messaging app companies,
suggesting management may want to build up its user base to get the
kind of valuation it wants.
"Rather than going public when Line's MAU numbers may not be
received favorably by the market, it may make sense to get pre-IPO
type investment from companies like Alibaba and expand to new
businesses," he said.
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A second person with direct knowledge of the matter, who did not
want to be identified, told Reuters the decision not to proceed with
an IPO this year also factored in the likelihood that Line's
decision-making may be slowed once it goes public.
Line needs to raise money to expand beyond its Japanese stronghold
and challenge deep-pocketed messaging services such as Chinese
internet company Tencent Holdings Ltd's WeChat, popular in the
world's No.2 economy, and Facebook Inc's WhatsApp, analysts have
Masayuki Otani, chief market analyst at Securities Japan, said the
Tokyo market, which will be closed for a holiday on Tuesday, may
also reflect disappointment.
"The market has been moving on the assumption of a listing this
year, so this will likely be a negative factor for related shares,"
(Additional reporting by Daiki Iga and Yoshiyasu Shida in Tokyo;
Editing by Tony Munroe and David Holmes)
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