China's Xiaomi files for mega Hong Kong IPO

Xiaomi files for IPO in Hong Kong expecting to raise $10 bn, the largest such listing by a Chinese tech company in four years

Chinese smartphone maker Xiaomi filed documents Thursday with Hong Kong's stock exchange operator for an initial public offering that could be the world's biggest share sale in years.

The listing could value the company at up to Dollars 100 billion and would be the biggest Chinese tech IPO since Alibaba Group Holding Ltd raised USD 21.8 billion in 2014.

Xiaomi's decision, four years after Alibaba Group Holding Ltd chose NY, signals a new phase for the city's ambitions to rival the U.S. market. Which allow companies with different share classes to be listed on the Hong Kong Stock Exchange. It made a net loss of 43.89 billion yuan versus a profit of 491.6 million yuan in 2016, though this was impacted by the fair value changes of convertible redeemable preference shares.

Xiaomi did disclose its latest financial results, showing revenues rose 67.5 percent a year ago to CNY 114.6 billion.

The company said 28 percent of its revenue came from worldwide operations in 2017, compared to 13.4 percent in 2016 and 6.1 percent in 2015. And a day ahead of the IPO filing, the company debuted streaming apps in India. Yunfeng Capital Management, the private equity fund of Alibaba's co-founder Jack Ma Yun, is an investor in Xiaomi.

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


"Investors will like Xiaomi's business model because growing user numbers guarantee profits in the future", said James Yan, an analyst at Counterpoint. It has enjoyed particularly strong growth in India, where it has overtaken Samsung as the biggest selling smartphone maker. It now sells everything from smartphones and fitness trackers to rice cookers and suitcases.

Xiaomi is seeking to go public at a sensitive time for Chinese tech companies.

To reach more customers, Xiaomi went physical: it now operates more than 500 brick and mortar retail stores, mostly in China and India. Xiaomi is reportedly talking to US carriers about selling its flagship phones in the states starting later this year, or early in 2019.

That would catapult Xiaomi, founded in 2010 by serial entrepreneur Lei Jun, past Baidu and JD.com to become the third-biggest Chinese technology company by value, after Tencent Holdings and Alibaba Group Holding.

Smartphones continue to represent the bulk of sales at 70 percent, with smart devices pulling in 20 percent more and services responsible for the remainder.

It said it is ready to expand its operations globally, while consolidating its position in emerging markets.

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