Chinese Smartphone Major Xiaomi Files for Hong Kong IPO

Dwayne Harmon
May 3, 2018

The third-largest phone maker in China and the fourth-largest worldwide, Xiaomi's filing is also a boon for Hong Kong's stock exchange, which recently loosened its rules to try and attract more companies to list there. Its filing didn't give details on the size of the planned IPO, but reports have suggested it could be worth around $10 billion. In fact, this will be the biggest IPO in the world since Alibaba went public in 2014.

Xiaomi, which is one of the most valuable startups anywhere in the world, did not comment on Thursday about the value of its IPO, which should take place within the next few months.

Exchange officials of Shanghai and Shenzhen had been particularly aggressive in wooing Xiaomi and other Chinese technology companies to raise capital onshore, promising fast-tracked approvals, easier regulations and additional incentives. However, people with knowledge of the case said that at least $10 billion can be expected to raise from the listing.

The consumer electronics company shared its detailed financial position for the first time ahead of its IPO.

According to research firm IDC, Xiaomi has also steadily expanded its overseas market and less than half of its phone shipments in the first quarter of this year were domestic.

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This implies that not only can we expect Xiaomi smartphones to come to the United Kingdom, but the company's other products too, such as devices in the smart home and wearable categories.

The company did not say how many shares it will sell or at what price yet in the preliminary prospectus. Xiaomi, which initially had an online presence, opened hundreds of retail stores and also its strong growth in the home market and India were major factors for its resurgence. In 2017, it recorded $18 billion (114 billion yuan) in revenue - a 67 percent increase in sales compared to the year before. However, the company experiences trouble, suffering a fall in 2016 in its sales of smartphones, as it was hit with problems with its supply chain. Lei Jun, Co-founder and CEO, said CDRs was "an excellent idea" and a "great policy innovation". But that's still a fraction of the 80 billion yuan ($12.5 billion) it made from smartphone sales.

Xiaomi's listing plans come as the company and its investors look to capitalize on a bull run for the Hong Kong market, which has seen the benchmark Hang Seng Index rise about 27 percent over the past year.

Chinese smartphone makers, notably Huawei and ZTE, have found themselves under increased scrutiny by us agencies like the CIA and Federal Bureau of Investigation.

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