Line Delays Setting IPO Price Range Amid Brexit Turmoil

Line Delays IPO Pricing Amid Brexit Turmoil
  • Japan messaging serivce plans largest tech IPO of the year
  • Line is seeking to raise more than $1 billion from share sale

Line Corp., Japan’s most popular messaging service, plans to delay till Tuesday the setting of a price range for its initial public offering after Britain’s vote to exit the European Union sent global markets into turmoil.

Line will proceed with pricing on June 28, the Tokyo-based company said in a statement after the market closed. It has said it’s seeking to raise as much as 113 billion yen ($1.1 billion) from the sale of new and existing shares, which would make it the largest IPO by a technology company this year. It said at the time it would set the price range on June 27 and the final price on July 11.

Since then however, the vote in Britain has rattled markets around the world. Japan’s benchmark Nikkei 225 index fell 7.9 percent on Friday after the vote, while markets in the U.S. and Europe also slid. Japan’s yen gained as much as 18 percent against the British pound, the most since at least 1971.

“Line pushed it back one day because it wants to see the situation and wait till the market calms down,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “The sentiment of corporate investors has not changed a lot.”

Investor interest in the offering is high and Line does plan to proceed with its IPO as it assesses the market conditions, said a person familiar with the matter, asking not to be identified because the matter is private. The company is raising funds to meet increasing challenges from Facebook Inc.’s Messenger and WhatsApp and from China’s WeChat.

Line is looking to expand its 218 million user base beyond its strongest markets of Japan, Taiwan and Thailand. The company, owned by South Korean search portal Naver Corp., plans to use the proceeds to spearhead an expansion across Asia and, eventually, the U.S.

The structure of Line’s IPO hints at its longer-term geographical ambitions. It plans to sell almost two-thirds of its offering in the U.S., an unusually large allocation for a Japanese company. Investors will want to hear about its broader expansion goals during the upcoming roadshow, even as they scrutinize its business performance.

Facebook and Tencent Holdings Ltd. already hold sway in the U.S. and China, the world’s two largest internet markets. WhatsApp and Messenger each count about a billion users and dominate through sheer numbers, while Tencent’s WeChat has become intertwined with the daily lives of its 762 million users, offering everything from car bookings to restaurant payments.

Nomura Holdings Inc., JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc. are the lead underwriters.

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