Xiaomi seeks valuation of at least $50B in IPO
tokyo — Xiaomi Corp, the Chinese smartphone maker that was once the most valuable startup in the world, is in talks with investment banks about an initial public offering and seeking a valuation of at least $50 billion, according to sources.
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 sources. 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.
Over the weekend, Lei denied a report in The Information that Xiaomi is considering an IPO as early as the second half of 2018, according to Sina.com.
Founded in 2010, Xiaomi, or Little Rice, made its mark with buzzy online marketing campaigns, eschewing traditional retail stores. By 2014, its formula of flash sales and savvy social media helped it top Chinese smartphone rankings and amass the valuation that made it briefly the highest in the world, before it was surpassed by Uber Technologies. Lei, who often sported black turtlenecks, was compared with Apple’s Steve Jobs.
But Xiaomi stumbled last year, with shipments plunging against fierce local competition. The company ranked only fifth in Chinese phone shipments in the first quarter, according to research firm IDC. Oppo and counterpart Vivo punished the company by developing strong ties with retailers in small towns and rural areas of China.
Lei has revived the company by expanding its product line, geographic reach and sales channels. Xiaomi is making a major push into old-fashioned retail: it plans to build 1,000 ‘Mi Home’ stores by 2019. — Bloomberg