Is Japan's Line a Silver Lining for IPO's

By Lindsay Castleberry IPOs

IPO market heating up this summer

Renaissance Capital Co-Founder Kathleen Smith on Japanese messaging app Line's IPO and the state of the overall IPO market.

Japanese messaging app, Line, is gearing up for its public debut Thursday in what could be the biggest technology listing of 2016.

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“Because of the [market] volatility, investors have been very valuation sensitive and they’re looking for stronger more established companies,” Renaissance Capital Co-founder Kathleen Smith told the FOX Business Network’s Maria Bartiromo.

Smith added that Line looks to fit the bill for what investors want right now: A large, profitable company set for a big IPO, and could be the first of many in a string of public offerings if both the U.S. economy and the market continues to improve.

Line has priced its dual IPO at the top end of the range, raising more than $1 billion, an indication that the IPO market could be gaining traction.

“Summer is here and the IPO market is starting to heat up,” Smith said. “We’ve had a very cold winter. The number of IPOs got down to 50% below the prior year’s issuance levels.”

According to Smith, returns have been strong and investor sentiment is changing.

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“It’s the fuel that drives the IPO issuance engine and then you need the stable market background. I think we have the equation now,” she said.

Line is similar to WhatsApp, a popular mobile messaging app in the U.S., and WeChat, a messaging platform widely used in China. Currently, Line is the dominant messaging app in Japan, Thailand, and Taiwan.

“The important thing is, Line knows how to monetize better than any of these competitors,” Smith said. “It has been able to monetize its users better than Facebook’s What’s App and the others. This is a competitive industry.”

In addition to free mobile messaging, Line makes its money by charging for digital stickers, games, and advertising opportunities.

The company’s shares will debut on the New York Stock Exchange Thursday and on the Tokyo Stock Exchange Friday.

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