Xiaomi to seek $50-bn valuation in IPO
Xiaomi, the Chinese smartphone maker that was once the most valuable start-up in the world, is in talks with investment banks about a possible initial public offering and seeking a valuation of at least $50 billion, according to people familiar with the matter.
The Beijing-based company is considering an offering as soon as next year with banks suggesting Hong Kong as the most likely destination, said the people, requesting not to be named because the matter is private. While banks have talked up Xiaomi’s prospects as they seek to win the mandate, they have concerns about whether the company can reach the $50 billion level, much less a $100 billion target that some top executives have embraced, the people said. Xiaomi last raised money in 2014 at a $46 billion valuation. Xiaomi has gained momentum in recent months after stumbling against local rivals such as Huawei Technologies and Oppo. The company, led by Lei Jun, has invested aggressively in retail stores and in India. It’s now on the verge of surpassing Samsung Electronics in the country, the world’s fastest-growing smartphone market. A successful IPO may bring it at least $5 billion, much-needed ammunition for expansion, the people said. “We want to transplant China’s business ideas into other countries,” Lei said Monday at the World Internet Conference in Wuzhen, without commenting on an IPO. “In India, we’ve created a miracle. After only three years, we’ve become number one.”
Kaylene Hong, a Xiaomi spokeswoman, says the company does not comment on IPO matters. The Information reported earlier that Xiaomi is considering an IPO as early as the second half of 2018.
While the company has had ups and downs, the $50 billion target may be attainable, depending on business performance and market trends over the next few months.
“It’s not a preposterous valuation,” said Keith Pogson, global assurance leader for banking and capital markets in Hong Kong at consultant EY. “Without a doubt, the market is hot for tech companies, especially tech companies with China ties.”
Founded in 2010, Xiaomi, or Little Rice, made its mark with buzzy online marketing campaigns, eschewing traditional retail stores.