Xiaomi kicks off Hong Kong IPO with lower target

HONG KONG: Chinese smartphone maker Xiaomi kicked off its initial public offering yesterday but the firm is likely to pull in about US$6.1 billion (RM24.4 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 Hong Kong IPO, 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$17-22 (RM8.70-11.20) apiece, according to Bloomberg News, which values it at about US$53.9-69.8 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 mainland authorities to open up markets in the world’s number two economy.

But 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 has cancelled a listing review originally scheduled for June 19.

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

CEO Lei Jun claimed it was an internet services company making money via online games and advertisements despite 70% of its revenues coming from selling hardware, particularly smartphones.

China Mobile Ltd and US wireless-chip giant Qualcomm are among the cornerstone investors and it is expected to list on July 9. – AFP