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Capital Markets

Flea market app Mercari eyes June listing in Tokyo

IPO could leave the Japanese 'unicorn' with a market cap north of $1.8bn

Established in 2013, Mercari gives users a simple way to buy and sell secondhand goods through an app on their smartphones.

TOKYO -- Flea market app operator Mercari looks to list on the Tokyo Stock Exchange's Mothers market for startups in June in what could be a big initial public offering.

The marketplace for secondhand goods is one of only a few Japanese "unicorns" -- an unlisted startup worth $1 billion or more -- according to a Nikkei survey. When it goes public, Mercari's market capitalization could top 200 billion yen ($1.8 billion), putting the company among the largest issues on the Mothers market. Top player Mixi and No. 2 issue Cyberdyne had market caps of 388.8 billion yen and 261.7 billion yen as of Thursday.

Many expect the Tokyo-based company to both sell existing shares and issue new equity in the IPO. The proceeds will help fund expansion in overseas markets and forays into new fields of business. The company is already working to build its presence abroad, bringing on former Facebook Vice President John Lagerling last June.

Mercari gives users a simple way to buy and sell secondhand goods through an app on their smartphones. Since the company was founded in 2013, its app has been downloaded over 100 million times in Japan, the U.S. and the U.K., largely by young people without bank accounts or credit cards.

The company had finished filing for the IPO by last summer and initially looked to list by the end of 2017. But a feature that lets users apply proceeds from the sale of one item to the purchase of another drew the attention of Japan's Financial Services Agency, which believed that the company should be placed in a business category subject to strict regulation. Mercari in the end registered in a less-stringent category.

The company also took steps to strengthen protections against fraud in December, at the urging of police. This involved having customers provide personal information including their name, address and date of birth before listing an item.

The self-regulatory arm of TSE operator Japan Exchange Group now plans to wait three months to see how these changes undertaken by Mercari affect earnings before deciding whether the company's listing will proceed. There seems to have been no direct impact so far. If all goes well, the company could go public by the time its fiscal year ends in June.


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