TOKYO -- Messaging app provider Line will be fighting above its weight class when it meets social networking service rivals in the global market. To succeed, the Tokyo-based company will have to come up with services that only it can offer.
The Tokyo Stock Exchange announced Friday that Line will go public on the bourse on July 15. A listing is also planned on the New York Stock Exchange around that time.
Line first started seeking out an initial public offering in 2014, but top brass was split between a Tokyo-only listing, a New York-only listing, or both. In the end, the app provider elected to become the first business in Japan to list on both the TSE and the NYSE. The move was to show that the company has not forgotten its resolve to take on the world, said an executive.
Line will likely raise approximately 100 billion yen ($935 million) from the offerings, with 63% originating overseas and the rest coming from Japan.
There have been more than a few bumps in the road in arriving at this stage. Line is expected to have a market capitalization of 600 billion yen when it goes public. Analysts had pegged the company's market value at 1 trillion yen in 2014, at a time when SNS stocks were being overbought. However, Line's listing was repeatedly delayed due in part to unstable earnings.
Line's valuation has since sunk. "The outlook for success is unclear given that the margin for growth in the domestic market has shrunk, as well as the many rivals already established in overseas markets," said a person familiar with the market.
The Japanese company will be playing catch-up to titans such as U.S.-based Facebook and China's Tencent Holdings, with market capitalizations of $339 billion and $212 billion, respectively. There are also wide gaps in user bases. Line's 218 million users are dwarfed by Facebook's 1.65 billion and the 760 million people who log on to Tencent's WeChat app.
Line cannot take on the titans head-on, especially when they are gobbling up competitors in large-scale acquisitions. The smaller company will use part of the proceeds raised in the offerings to buy promising startups in segments such as e-commerce and digital content.
The Japanese firm will also narrow its geographic focus to fit its scale after finding little success breaking the hold of rivals in Western markets. Line will first concentrate resources in Taiwan, Thailand and Indonesia -- places besides Japan where the app is popular. The company aims to capture growth markets down the line.
In Thailand, where people often opt not to eat out because of chronic traffic congestion, a smartphone-based delivery service spanning 10,000 restaurants has become a hit. Line plans to apply know-how gained from such services to other countries.
Line launched a business strategy this year that aims to turn the eponymous app into a "smart portal." Not only will users chat, make phone calls and get their news via the app, they will also have access to services like digital videos and smartphone payment systems.
The new services will also provide additional advertising platforms. This month, Line started automatically serving targeted ads based on users' interests. Unlike Tencent, which derives much of its earnings from games, or Facebook, which is dependent on ads, Line is banking on its diverse revenue streams.