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Equities

Japanese unicorn Mercari's market cap seen reaching $3.6bn

Flea market app operator raises IPO target price on firm demand

Investors at home and abroad are bullish on Mercari's growth prospects. (Photo by Satoshi Morotomi)

TOKYO -- Japanese flea market app operator Mercari has raised the estimated price for its initial public offering this month amid keen investor interest in a Japanese unicorn, bringing its market valuation as high as $3.64 billion.

The startup said Friday it has set the indicative prices for book-building at between 2,700 yen and 3,000 yen, up from the originally planned 2,200 yen to 2,700 yen. A debut at the top end of the new range would put Mercari's market cap at more than 400 billion yen, or $3.64 billion -- far above the threshold for unicorns, which are startup companies valued in excess of $1 billion.

Investors attending pre-IPO briefings inside and outside Japan praised Mercari's growth potential, particularly in its home market, according to the company. Underwriters will solicit interest next week based on the tentative terms and set the official price on June 11 ahead of Mercari's June 19 debut on the Tokyo Stock Exchange's startup-laden Mothers market.

The company plans to issue as many as 21 million new shares. An additional 22.5 million shares will be sold by existing investors, including CEO Shintaro Yamada, trading house Mitsui & Co., mobile advertising company United and venture capital firms.

Mercari is set to raise as much as 63 billion yen through the listing. It plans to spend about 11 billion yen on advertising to grow its user base in Japan and the U.S., with the remaining funds to go toward paying developers and expanding its services.

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