China's Xiaomi submits HK filing, with big IPO expected

Smartphone Maker Xiaomi Files For World's Biggest IPO Since 2014

Smartphone Maker Xiaomi Files For World's Biggest IPO Since 2014

The smartphone manufacturer will be the first major company to go public in that country since rule changes allow for the listing of different share classes on the Hong Kong Exchange.

The Beijing-based company did not disclose the amount it is seeking to raise or its projected valuation.

Chinese technology company Xiaomi's IPO application has shed light on the company's finances, showing a rebound from declining sales two years ago to current worldwide growth.

The listing could value the company at up to Dollars 100 billion and would be the biggest Chinese tech IPO since Alibaba Group Holding Ltd raised USD 21.8 billion in 2014. According to IDC, the company is the fourth largest smartphone manufacturer, and saw its global smartphone shipments soar 87.8% year-over-year during the first quarter. For smartphones alone, it had a revenue of 80.56 billion yuan, up 65 percent from the previous year. Excluding the charges, adjust net profit jumped to CNY 5.4 billion from CNY 1.9 billion.

In India, Xiaomi said, it has leveraged its number one position to expand and monetize its user base.

The company is also facing greater competition in emerging markets like India and Indonesia, where competitors Huawei, Oppo and Vivo are expanding. These devices include scooters, air purifiers and rice cookers and much more, however, the company drives most of its profits from internet services.

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Total sales from its ecosystem doubled to 20 billion yuan in 2017.

Xiaomi's listing application appears to be an early vindication for Hong Kong's securities regulator and exchange operator, which together pushed through the biggest reforms in the city's listing regulations in decades.

Under the new rules, founders and executives are allowed weighted voting rights common in the United States. In the last quarter of 2017, the firm said that Xiaomi was ahead of Samsung in India in terms of market share. Yunfeng Capital Management, the private equity fund of Alibaba's co-founder Jack Ma Yun, is an investor in Xiaomi. Each Class A share will entitle the holder to exercise 10 votes, while each Class B share will give the holder one vote.

Xiaomi's listing plans come as the company and its investors look to capitalise on a bull run for the Hong Kong market, which has seen the benchmark Hang Seng Index rise about 27 per cent over the past year. Two Chinese biotech companies said they would switch their New York IPOs to Hong Kong to raise US$800 million, Reuters reported last week.

The firm is also expected to issue Chinese depositary receipts after it goes public.

CLSA, Morgan Stanley and Goldman Sachs Group Inc are sponsoring Xiaomi's IPO.

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