ZCZC
BCN-32
HONGKONG-TELECOMS-COMPANY-XIAOMI-IPO
Xiaomi lowers target as it kicks off IPO
HONG KONG, June 21, 2018 (BSS/AFP) – Chinese smartphone maker Xiaomi
kicked off its initial public offering Thursday but the firm is likely to
pull in about $6.1 billion, far less than originally expected, with investors
having mixed views about its main business.
Xiaomi had hoped to raise $10 billion with the Hong Kong IPO, making it
the biggest since Alibaba’s $25 billion New York debut in 2014 and valuing
the company at about $100 billion.
However, the firm is offering 2.18 billion shares at HK$17-HK$22 apiece,
according to Bloomberg News, which values it at about $53.9-$69.8 billion.
Xiaomi had hoped to be the first company to list shares in Hong Kong at
the same time as launching new Chinese Depository Receipts (CDRs) in Shanghai
under new rules announced in April by mainland authorities to open up markets
in the world’s number two economy.
But on Tuesday it put off its decision on listing the CDRs until it
completes its IPO in Hong Kong. The China Securities Regulatory Commission
said it has cancelled a listing review originally scheduled for June 19.
This delay, as well as differing market views about Xiaomi’s business
model, were also among reasons for the lower valuation.
CEO Lei Jun claimed it was an internet services company making money via
online games and advertisements despite 70 percent of its revenues coming
from selling hardware, particularly smartphones.
The firm, which mainly sells cheap but high-quality smartphones in China,
is looking to push into Europe — recently opening its first flagship store
in Paris — as the home market reaches saturation point.
China Mobile Ltd and US wireless-chip giant Qualcomm are among the
cornerstone investors and it is expected to list on July 9.
Chinese authorities devised the CDR programme, under which homegrown
companies listed abroad can simultaneously list at home, after watching
technology heavyweights Alibaba and Baidu list on Wall Street.
The objectives of the plan include helping to develop China’s still
relatively immature and volatile share markets while allowing domestic
investors to invest in the country’s big tech champions.
Alibaba and Hong Kong-listed Tencent have expressed an interest in the
plan.
Xiaomi shipped 28 million smartphones worldwide from January to March, an
88-percent surge year-on-year.
That was fourth in the world after Samsung, Apple and China’s Huawei,
according to figures from the International Data Corporation.
BSS/AFP/HR/1148