Xiaomi Seeks To Raise US$6bn In Hong Kong IPO

Xiaomi Corp. said it seeks to raise up to US$6.1 billion in its initial public offering next week that would value the Chinese smartphone maker at as much as US$70.3 billion.

The details of the Hong Kong IPO released on Saturday show the Beijing-based company will raise less than an earlier expectation of up to US$10 billion that would have valued the company at US$100 billion. But it will still be among the biggest tech IPOs since Chinese e-commerce giant Alibaba raised US$21.8 billion in 2014.

Xiaomi shares will start trading on the stock exchange in Hong Kong on July 9, after a public offering of 2.2 billion shares to institutional investors next week at between HK$17 to HK$22 (US$2.2 to US$2.8) per share.

The eight-year-old company that also makes robot vacuum cleaners, air purifiers and TVs is a star among Chinese unicorns, a startup valued at more than $1 billion.

The IPO means Xiaomi is stepping up its game in international markets while trying to reduce its revenue reliance on smartphone sales, which accounted for 70 percent of the company's revenue in 2017.

The proceeds from the public offering will provide cash for the company's global expansion as well as strengthening its mobile internet services and artificial intelligence.

The company said one third of its proceeds will fund Xiaomi's hardware research and development, another third will finance its global expansion and the rest will be used to strengthen internet ecosystem for its connected devices, called the internet of things, or IoT.

The Mi series smartphones helped drive Xiaomi's quick rise with their ultra-cheap prices and competitive quality but stagnant growth in the smartphone market, especially in developed countries, means Xiaomi needs new revenue sources outside its "higher quality half the price" smartphone business model.

"Xiaomi targets the revenue proportion from IoT services to increase to 40 to 50 percent in the coming eight to 10 years," Jun Lei, the co-founder and chief executive at Xiaomi, told reporters.

In 2017, those services accounted for less than 30 percent of the company's revenue. (AP)