Xiaomi files for largest IPO since 2014 in Hong Kong

03 May, 2018, 20:23 | Author: Chad Warren
  • Xiaomi, a Chinese Start-Up, Picks Hong Kong for a Major IPO

Xiaomi, one of the biggest makers of smartphones in the world, has filed to become a public company in Hong Kong in what should be a massive initial public offering.

In the case where the company manages to raise that much through the IPO, Xiaomi will attain a market value of between $80 billion and $100 billion as per reports.

Back in 2014, Chinese e-commerce firm Alibaba broke records when it went public on the NYSE, raising $25 billion in what is to date the largest global IPO ever.

Xiaomi has filed their IPO at the Hong Kong stock exchange (HKEX).

When it revealed detailed financial info for the first time in 2017, Xiaomi posted a net loss of $6.9 billion, despite revenues of $18bn. In December 2017, Xiaomi counted 170.8 million active users on its custom Android platform, MIUI, with each user paying an average of 57.90 yuan or about $9.10 for the company's internet services, totalling a $1.6 billion revenue for that month alone. However, the company's revenue reached 114.62 billion Yuan ($18 billion) in 2017, which is up by 67.5 per cent against 2016.

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Xiaomi's going public in Hong Kong may open up the development of Chinese mainland's new economy and Hong Kong's capital market, which is a win-win situation, Cheng added.

Its relatively cheap handsets pose a rising challenge to market leaders Samsung Electronics Co Ltd and Apple Inc.

In the IPO filing, Xiaomi founder Lei Jun emphasized that Xiaomi is an internet company, not just a hardware maker. Selling phones with the latest processors and features at half the price of competing devices, it used buzzy flash sales to attract online customers mostly ignored by competitors.

It is not just investors and Xiaomi fans who are keeping a close eye on the Chinese smartphone maker's application for what may be the world's biggest IPO since 2014. Currently, Xiaomi is the fourth-biggest smartphone manufacturer in terms of the number of devices sold and has succeeded tremendously in the price/performance market. Xiaomi was the fastest growing brand in China during the quarter. This is a result of loosened rules for allowing companies with multiple classes of shares to raise equity. Each Class A share has 10 votes while each Class B share has one vote.

Xiaomi is also likely to be among the first Chinese tech firms seeking a secondary listing in China, using the planned depositary receipts route, two people with knowledge of the matter said.

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