Fri, Jun 22, 2018 - Page 10 News List

Xiaomi misses target with initial listing

DIFFERING VIEWS:Investors appeared not to agree with the Chinese company’s claim that it is an Internet services company, rather than a phone and electronics manufacturer


Chinese smartphone maker Xiaomi Corp (小米) yesterday launched its initial public offering (IPO), but the firm appeared likely to pull in about US$6.1 billion, far less than originally expected, with investors having mixed views about its main business.

Xiaomi had hoped to raise US$10 billion with the initial listing in Hong Kong, making it the biggest since Alibaba’s US$25 billion New York debut in 2014 and valuing the company at about US$100 billion.

However, the firm is offering 2.18 billion shares at HK$17 to HK$22 apiece, said Bloomberg News, which valued it at about US$53.9 to US$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 Chinese authorities to open up markets in the world’s No. 2 economy.

However, 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 had canceled a listing review originally scheduled for Tuesday.

The delay, as well as differing market views about Xiaomi’s business model, were also among reasons for the lower valuation.

Xiaomi chief executive Lei Jun (雷軍) said that the company is 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 (中國移動) and US wireless-chip giant Qualcomm Inc are among the cornerstone investors and it is expected to list on July 9.

Chinese authorities devised the CDR program, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba Group Holding Ltd (阿里巴巴) and Baidu Inc (百度) 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 Holdings Ltd (騰訊) 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 made the company fourth in the world, after Samsung Electronics Co, Apple Inc and China’s Huawei Technologies Co (華為), International Data Corp data showed.

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