Xiaomi files for world's biggest IPO since 2014

Chinese smartphone maker is expected to raise $13.3b in HK listing using territory's new rules

HONG KONG • Xiaomi Corp has become the first major company to use Hong Kong's new rules for going public, filing for what is expected be the world's biggest debut since 2014.

The Chinese smartphone maker is taking advantage of changes in the former British colony that mean companies with different share classes can now list in the city. While the filing did not say how much Xiaomi is looking to raise in the initial public offering (IPO), it is expected to be at least US$10 billion (S$13.3 billion), and could value the business as high as US$100 billion.

Xiaomi, reporting detailed financials for the first time, posted a net loss of 43.9 billion yuan (S$9.2 billion) last year, reversing from a profit a year earlier. Revenue, however, surged 67.5 per cent to 114.5 billion yuan last year.

The listing is a big win for Hong Kong Exchanges and Clearing, whose officials spent years pushing to scrap a ban on weighted-voting rights, which give founders and executives control even with minority ownership.

While some investors opposed the move, the decision on Xiaomi's listing, four years after Alibaba Group Holding chose to list in New York, signals a new phase for Hong Kong in its ambitions to rival the United States market.

Xiaomi's listing could be the biggest IPO since Alibaba's US$25 billion debut in 2014. Though it suffered a challenging 2016, the company bounced back by revamping its sales model and expanding in India, where it rivals Samsung Electronics as the biggest vendor.

Xiaomi's listing could be the biggest IPO since Alibaba's US$25 billion debut in 2014. Though it suffered a challenging 2016, the company bounced back by revamping its sales model and expanding in India, where it rivals Samsung Electronics as the biggest vendor.

The firm is also expected to issue Chinese depository receipts (CDRs) after it goes public. Xiaomi has picked Citic Securities to handle its CDR issuance, people familiar with the matter said. While China's State Council has approved plans to introduce CDRs, timing and details are unclear.

Co-founder and chief executive officer Lei Jun said CDRs were "an excellent idea" in a recent interview, calling them "a great policy innovation".

Under Mr Lei, Xiaomi is looking to enter developed markets for smartphones as it consolidates its position in emerging markets.

It entered Spain last year and is also said to be talking to US carriers to sell devices on Apple's home turf.

Apart from smartphones, Xiaomi has backed dozens of start-ups producing a wide spectrum of products, from wearables to rice cookers.

Total sales from its ecosystem doubled to 20 billion yuan last year.

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A version of this article appeared in the print edition of The Straits Times on May 04, 2018, with the headline 'Xiaomi files for world's biggest IPO since 2014'. Print Edition | Subscribe