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Digital-Advertising Startup Kauli Planning Tokyo IPO Next Year

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March 18 (Bloomberg) -- Kauli Inc., a Japanese digital-advertising company, is planning an initial public offering on the Tokyo Stock Exchange to finance expansion in the U.S. and Southeast Asia.

The Tokyo-based company is seeking to go public by March next year, Chief Executive Officer Katsuhiro Takata said in a March 14 interview at his office. Kauli may seek a valuation of more than 30 billion yen ($295 million) in the offering, said a person with knowledge of the matter, who asked not to be named because the information is private.

Kauli’s potential IPO comes after Twitter Inc. and Google Inc. acquired startups offering technology that helps Internet publishers maximize their advertising revenue. Kauli runs a platform that lets advertisers place real-time bids for advertising spots based on user profiles.

“The Twitter and Google acquisitions signaled growing demand for the area of digital-ad technology and gave us a push to expand in this business,” Takata, 36, said. “At the same time, it’s a business we’ve got to evolve and upgrade in a short period of time to survive.”

Twitter acquired MoPub Inc. last year for about $350 million in a deal that added real-time bidding to the microblogging service’s ad platform, people with knowledge of the purchase said in September. Google bought ad exchange operator AdMeld Inc. in 2011 for about $400 million.

Takata declined to comment on the potential IPO valuation.

Rising Spending

Investors in Kauli include D2C Inc., a marketing firm backed by Dentsu Inc. and NTT Docomo Inc., Japan’s largest wireless operator, according to the company’s website. Other backers include Draper Nexus Venture Partners and GMO Venture Partners Inc., the website shows.

Kauli plans to expand in the U.S., South Korea, Vietnam and Indonesia in coming years, said Takata, who founded Kauli in February 2009 after earning his doctorate in computer science from Tokyo’s Hosei University.

Japan’s Internet-advertising spending more than doubled in the eight years through 2013 to 938.1 billion yen, driven by an increase in usage of smartphones, according to a Feb. 20 report from Dentsu, Asia’s biggest advertising firm.

The country’s total advertising expenses, including on newspapers and television, rose 1.4 percent in 2013 to 5.98 trillion yen, the Dentsu data shows.

Kauli, which doesn’t disclose earnings, doubled its headcount over the past year to 42 and plans to expand it to 60 in the next 12 months, Takata said. The company has about a 20 percent share of Japan’s Internet ad market, which serves about 100 billion impressions monthly, according to Takata.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net Ben Scent

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