SmartNews seeks ¥11.2 billion in Tokyo IPO after 80% valuation cut

SmartNews is seeking to raise ¥11.2 billion ($70 million) in an initial public offering in Tokyo next month, at a valuation that’s 80% lower than its latest major funding round in 2021.

The news aggregator app developer’s founder and backers plan to offer 8.1 million shares at an indicative price of ¥1,390 each, according to a regulatory filing Thursday.

Mitsubishi UFJ Morgan Stanley Securities, Morgan Stanley MUFG Securities and Nomura Holdings are the underwriters of the share sale. Books will open on Nov. 30 and pricing is expected on Dec. 7, with trading to begin on Dec. 15.

The indicative price implies a market value of about ¥43.1 billion, compared with about ¥219 billion in the company’s F series funding round, based on the exchange rate at the time.

It is also lower than the valuation of about ¥50 billion that the company was reportedly seeking in the IPO after exploring a trade sale but failing to find a buyer. The valuation may yet change during the process as some companies launch deals with a conservative pricing indication.

The deal highlights the struggles of what was once one of the most best-regarded startups in the country. Founded in 2012, SmartNews gained traction in the U.S. and Japan with its news aggregation app and became one of the few unicorns in Japan.

But the rise of artificial intelligence has made its valuation ambitions harder to justify as more people turn to AI as a gateway to news, resulting in the mismatch between the company’s lofty valuation and what investors are willing to pay.

Still, the debut will inject some momentum to Japan’s IPO market after the number of deals shrank to a 13-year low. The deal flow dwindled as the bourse effectively narrowed the window of new listings for smaller firms after investors criticized the underperformance of such stocks.

Hillhouse Investment Management-backed luxury villa operator Nota is among the startups looking to debut in December.