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The company added only 3m in total monthly active users during the latest quarter, although that was a result of adding 7.7m in the four key Asian markets and losing users in others where it trimmed marketing costs.
Line's user base is also small compared to rivals such as WeChat in China, which has 650m monthly active users, and Facebook's WhatsApp with more than 1bn monthly users.
Despite its setbacks outside of Asia, however, analysts say that Line's targeted moneymaking approach has been effective. Revenue rose 40 per cent to Y120.7bn ($1.1bn) from 2014 to 2015, with advertising comprising nearly one-third of its sales.
The money raised from the IPO is expected to be used to step up marketing in its core markets and to invest in artificial intelligence and other technologies, said one of the people involved.
Broader investor appetite for IPOs at home and in the US is far from robust as Line prepares for its roadshow, however. The Nikkei Stock Average has fallen 13 per cent this year as momentum behind the government's growth programme has waned.
"Line has enough brand recognition to attract retail investors in Japan, but market conditions are not necessarily ideal," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.
Japanese companies raised $1.5bn via 44 IPOs and follow-on offerings this year, down 75 per cent from the same period a year ago and recording the lowest volume since 2009, according to Dealogic.
The outlook for technology deals in the US is uncertain with SecureWorks, the cyber security division of Dell, raising less than expected in April despite being the first tech IPO of 2016.
Line has hired Nomura, Morgan Stanley, Goldman Sachs, JPMorgan to advise on its IPO.
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