Xiaomi sets sights on Europe as IPO begins

Chinese smartphone maker offering $2.18b shares at HK$17HK$22 apiece in a bid to raise $6.1b

Chinese smartphone maker Xiaomi will aggressively target European markets, using part of the proceeds from its initial public offering worth $6.1 billion (Dh22 billion) in Hong Kong, the company’s cofounder said yesterday.

The company is offering $2.18 billion shares at HK$17 HK$22 apiece, in a bid to raise $6.1 billion, far less than the $10 billion originally expected, as an escalating trade war between China and the US dampens investor sentiment.

But at a press conference in Hong Kong yesterday, the company’s co-founders were bullish about its prospects, signalling plans for international expansion in Europe and Southeast Asia.

“Someone asked me if Xiaomi [will] only expand in developing countries? Last year we started to enter the European market and we realised we have a lot of ‘Mi fans’ in Europe,” Lei Jun, Xiaomi’s cofounder and CEO said.

The company will invest around HK$8.3 billion from its IPO proceeds towards boosting its presence in overseas markets including Spain, Russia and Indonesia.

The firm, which mainly sells cheap but high-quality smartphones in China, has been looking to push into Europe — recently opening its first flagship store in Paris — as the home market reaches saturation point. “We are planning for the US market and will find a proper timing to enter it,” Wang Chuan, co-founder and senior vice president of Xiaomi, said yesterday. “Xiaomi is very optimistic about the development of China-US trade, as every economic entity is relying on each other,” Wang added.

Worldwide shipment

Founded in 2010 by entrepreneur Lei, Beijing-based Xiaomi has grown from a start-up in Zhongguancun — China’s “Silicon Valley” — to the world’s fourth biggest smartphone vendor at the end of last year according to International Data Corp (IDC). The company shipped 28 million smartphones worldwide from January to March, an 88-per cent surge year-on-year.

Xiaomi is now valued at about $53.9-$69.8 billion, according to Bloomberg which said the IPO looks set to be the world’s biggest in two years.

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.