Xiaomi set to become a billionaire factory with Hong Kong IPO
HONGKONG: When Xiaomi Corp.’s founders were eating millet congee at an office in Beijing’s Zhongguancun neighbourhood in 2010, they decided to create a smartphone brand selling handsets at “honest” prices.
Eight years later, Lei Jun and the seven other Xiaomi co-founders have created a company that wants to challenge the global industry dominance of Apple Inc. and Samsung Electronics Co. It’s also targeting an initial public offering (IPO) that’s expected to be the largest since 2014, and which could create five new billionaires.
Xiaomi last week filed for a debut in Hong Kong that will value the company at $50 billion to $100 billion, according to six analysts surveyed by Bloomberg. Lei, the chairman and CEO, is the biggest shareholder with a 31.4% stake, while his fellow founders control 27% of the company, according to the prospectus.
While Lei and Lin Bin, Xiaomi’s president, are already billionaires, a $50 billion valuation would create three new billionaires. A market value of $100 billion would see five of Lei and Lin’s co-founders reach that mark, an example of how rapidly the world’s second-biggest economy is forging the megawealthy.
Among the world’s 500 richest people, there are 40 Chinese—the second most after the Us—with a combined wealth of $464 billion, according to the Bloomberg Billionaires Index. Just how big these fortunes will be may hinge in part on how many new shares are issued, with estimates of the public float ranging from 15% to 25%.
A $50 billion valuation with a 25% public float comprising only newly-issued shares would value Lei’s stake at $11.8 billion, while a $100 billion market cap with a 15% float would boost his stake value to $26.7 billion. That would also bring his total net worth to $28.3 billion, including investments in Kingsoft and YY Inc., making Lei China’s fourth-richest person.