Line Corp. (NYSE: LN) has entered the market with a bang as the biggest initial public offering (IPO) of the year thus far. Despite Japan having a rough run of 2016, Line is signaling hope for this country with the outstanding market reaction.
Not only did this company enter the market well above its original pricing but it set a precedent for all other tech companies looking to go public.
When the company filed with the U.S. Securities and Exchange Commission (SEC) for its IPO, it expected to price its 35 million American depositary shares (ADSs) in the range of $26.50 to $31.50 apiece, up from the previous range of $25 to $28. However Line ended up pricing its offering at $32.50 per ADS, but these ADSs actually entered the market at $42.
Each ADS in the offering represents one share of common stock. There is an overallotment option for an additional 5.25 million ADSs. Also the entire offering is valued up to $1.3 billion.
The underwriters for the offering are Morgan Stanley, Nomura, JPMorgan, Goldman Sachs and Goldman Sachs Japan.
This is a leading global platform for mobile messaging and communication services, content distribution and advertising. Its mobile messaging application, which is the foundation of the Line platform and operates on all major mobile operating systems, enables users to communicate through free instant messaging and voice and video calls and serves as a smart portal to other applications and services.
Line provides users with access to a wide range of social and interactive content and services for access to information and entertainment such as mobile games and music through “content platform,” as well as online-to-offline (O2O) services such as payment services and job posting, restaurant reservation and taxi-booking services through its “life platform.”
The company believes that the integration on its Line platform of content and services offers users a convenient way to connect and have fun with their family and friends, explore and share their interests and satisfy their daily needs with greater ease, which Line believes enriches the user experience and ultimately contributes to higher user loyalty.
The user base has grown to 218 million monthly active users (MAUs) globally in March 2016, with 152 million MAUs located in the four largest markets of Japan, Taiwan, Thailand and Indonesia. It currently provides services in 19 languages.
The company intends to use the net proceeds from this offering to finance its business expansion and repay indebtedness, with the remainder going to working capital and general corporate purposes.
Shares of Line were up over 30% at $41.26 from its pricing. So far over 19 million ADSs have moved on the day, with the range on the day coming in at $41.37 to $44.44.
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