IPO expected to value firm at at nearly $7bn

IPO expected to value firm at at nearly $7bn

Tokyo, Japan – Japan's Line Corp will launch the country's largest initial public offering (IPO) of the year when it lists in New York on Thursday and Tokyo on Friday, expecting to raise up to $1.3bn.

A Japanese subsidiary of South Korea's Internet giant Naver, Line Corp's instant messaging app has soared in popularity since debuting in Japan in 2011, and now boasts 218 million active users monthly, the majority of them in Asia.

Line’s 2015 revenue totaled $1.2bn, a 40 percent increase from 2014, mainly through the sales of its wide range of electronic cartoon emoticons, known as "stickers", games and an advertising business.

The app's 258,000 sticker set collection distinguishes Line from other competitors. The firm has logged a total of 2.4 billion stickers sent and received in a single day.

The IPO is expected to put the company's value at nearly $7bn.

"It’s easy for me to convey my feelings when I use the stickers," Japanese student Ryosuke Nomura, 17, told Al Jazeera at the Line Friends store in Tokyo's hip Harajuku area.

Line’s sticker characters, called Line Friends, even have a fandom, which has boosted merchandise sales - not only of digital stickers but also a wide range of products from dolls, stationery, jewelry and fashion to kitchenware.

Line Friends stores with cafes have opened in Tokyo, South Korea and other cities in Asia.

"I started to use Line, mainly because of the cute Brown character. But now I am using it to get in touch with my friends in other countries in Asia," 32-year-old Baek Won-ki, a South Korean office employee, told Al Jazeera.

A feature of the app is its ability to simultaneously translate messages in a chat room. For example, if one person enters a message in Korean in a chat room, the message is simultaneously translated into Japanese or Chinese when it appears to other users in the chat room.

Overrated?

Line is still not as popular as mobile messaging heavyweights such as WhatsApp, Facebook Messenger, WeChat by China's Tencent, and Viber.

So why are investors excited about this dual IPO?

Reiko Shofu, president and CEO of online micro consulting service firm Sensing Asia Ltd, pointed to Line's rapid growth in revenue over the past few years.

Line's long-term outlook, however, might not necessarily be that bright, Shofu said.

"It’s overrated. It takes time for Line to sustain bottom-line viability. When you look at Line's business model, it’s a very costly, complex business structure," she said.

Line has made efforts to widen its revenue base by developing into a broader, multi-feature platform such as a news distribution and payment solutions.

"If Line manages to pass through their strategy and establish its platform on mobile money transactions, including person-to-person money transfer, then I think their business can last for 10 or 15 years," Shofu said.

The dual listing indicates the firm’s intention to expand their business globally at a time of global economic turbulence, further exacerbated by Brexit, and cooling hype around tech firms. Line’s IPO is the largest since Chinese e-commerce site Alibaba listed in 2014.