SmartNews said to plan December Tokyo IPO as valuation craters

SmartNews is preparing to go public in December with a significantly reduced valuation, according to sources familiar with the company's plans. The Tokyo-based news aggregator is aiming for a market value of approximately ¥50 billion ($317 million) in an anticipated IPO, a stark contrast to its $2 billion valuation in a 2021 funding round.

The company's executives are still deliberating on the specifics, including the exact timing and valuation of the offering. A SmartNews spokesperson confirmed that the company regularly reviews its capital strategy, but no final decisions have been made. The firm has also considered a sale to another entity but has yet to find a suitable buyer at its desired valuation.

SmartNews had previously contemplated listing just this month. The company has retained Mitsubishi UFJ Morgan Stanley Securities and Nomura Holdings to act as lead managers for the IPO, and it has gauged global investor interest. However, SmartNews' journey to an IPO highlights the disparity between the inflated valuations of Japan's private tech startups and the limited investor appetite.

Other high-growth Japanese companies, such as the KKR-backed SmartHR, are also facing challenges, with investors questioning the companies' targeted valuations as excessively high. Established in 2012, SmartNews has been particularly hard hit by the explosive growth of artificial intelligence, which has transformed how many people access news.

The company employs algorithms to aggregate global content and offers access to over 3,000 media outlets. Following a workforce reduction of 40% in the US and China in 2023, SmartNews has been focusing on expanding its advertising and subscription revenue streams.