(Updates with comment from economist in fourth paragraph.)
June 3 (Bloomberg) -- Line Corp., a mobile messaging application operator, is working with Nomura Holdings Inc. and Morgan Stanley to prepare for an initial public offering as soon as November, people with knowledge of the matter said.
Line, based in Tokyo and controlled by South Korea’s Naver Corp., is considering listing on the Tokyo Stock Exchange and either the New York Stock Exchange or Nasdaq, according to the people, who asked not to be named as the matter is private.
The operator of Japan’s most popular mobile messaging application may have a market value of more than 1 trillion yen ($9.8 billion), the people said. The IPO would follow Facebook Inc.’s plans to buy WhatsApp Inc. for as much as $19 billion and Rakuten Inc.’s $900 million purchase of Viber Media Ltd. as mobile users increasingly turn to app providers to send instant messages and make phone calls.
“A valuation of $10 billion or even $20 billion would be no surprise for Line, given Facebook’s massive WhatsApp deal,” Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo, said by phone today. “Line will need to spend on research and development and mergers after going public, in order to create more services and maintain its value.”
Line hasn’t determined the size of the IPO or decided which banks will be the lead underwriters, the people said.
“An IPO is one of the options for management but nothing has been decided at this point,” Hazuki Yamada, a spokeswoman for Line in Tokyo, said by phone today, declining to comment further.
Kenji Yamashita, a spokesman for Tokyo-based Nomura, declined to comment, as did Morgan Stanley’s spokeswoman in the Japanese city, Mika Watanabe.
Nomura, Japan’s biggest securities firm, is the No. 1 manager of equity offerings in the country this year, according to data compiled by Bloomberg. New York-based Morgan Stanley’s investment banking venture with Mitsubishi UFJ Financial Group Inc., Japan’s largest lender, is ranked second, the data show.
Naver created Line after the March 2011 earthquake and tsunami in northeastern Japan knocked out telephone services. Subscribers to the application breached the 400 million mark on April 1.
Chief Executive Officer Akira Morikawa is targeting 500 million to 600 million users by the end of the year. He plans to double the number to at least 1 billion globally in 2015, Morikawa said in April.
About 85 percent of subscribers are outside Japan, the company said in February. Line has added features such as games, comics, free voice and video calling, photo and video sharing, and tie-in apps including a camera.