Xiaomi raises US$4.7b after pricing IPO at low end of range
HONG KONG: Xiaomi Corp and some existing investors raised US$4.7 billion (RM18.99 billion) after pricing a Hong Kong initial public offering (IPO) at the low end of a marketed range, said a source.
The smartphone maker priced the sale of 2.18 billion shares at HK$17 (RM8.75) each, said the person. Xiaomi had offered the shares at HK$17 to HK$22 apiece. The pricing values Xiaomi at about US$54 billion, roughly half the company’s initial goal.
Billionaire George Soros and Chinese investment firm Hillhouse Capital were among investors that placed orders for Xiaomi IPO shares, said people with knowledge of the matter earlier.
“Xiaomi’s exceedingly thin margins from hardware significantly drags down its valuation for potential investors,” said James Yan, an analyst with Counterpoint Research. “I expect it to invest more in the smartphone unit, especially on international expansion. It also needs cash to beef up its ecosystem in markets like India. All those fronts are extremely capital-intensive.”
The offering was Hong Kong’s biggest first-time share sale since September 2016, when Postal Savings Bank of China Co priced a US$7.6 billion IPO, according to data.
Xiaomi, led by serial en- trepreneur Lei Jun, is the first major tech listing here since the city changed its rules to allow founders to keep outsized voting rights.
A Soros-backed fund placed an early order for a small amount of Xiaomi stock, according to one of the people. Hillhouse placed an order of around US$600 million, while United States asset manager Capital Group Cos placed an order for more than US$500 million of stock, said the people.
A price at the low end of Xiaomi’s IPO range translated into 22.7 times its forecast 2019 earnings, assuming a so-called overallotment option was fully exercised, said Bloomberg News.