After postponing Shanghai IPO, Xiaomi today confirmed that it will list in Hong Kong first offering a total of 2,179,585,000 Shares (subject to the Over-allotment Option), comprising initially 108,980,000 Hong Kong Offer Shares (subject to adjustment) and 2,070,605,000 International Offer Shares (subject to adjustment and the Over-allotment Option). The offer price range is from HK$17 to HK$22 per share, so the company could raise anywhere between US$ 4.72 billion and US$ 6.1 billion.
Even though this is less than $10 billion, which Xiaomi was reportedly hoping to achieve a few weeks ago, this would still make it the world’s biggest initial public offering (IPO) in nearly two years.
Xiaomi said that it intends to use the proceeds from the offering for the following purposes:
- Approximately 30% for research and development as well as other efforts to develop the Company’s core in-house products, including smartphones, smart TVs, laptops, AI speakers and smart routers;
- Approximately 30% for investments to expand and strengthen the Company’s ecosystem primarily in the fields of IoT and lifestyle products and mobile internet services, including AI;
- Approximately 30% for global expansion, including but not limited to hiring local teams across business functions and investing in its retail partners; and
- Approximately 10% for working capital and general corporate purposes.
Xiaomi said that it is present in 74 countries and regions as of March 31, 2018. The company intends to leverage its strong execution abilities to localize its unique business model internationally. Outside of mainland China and India, it will focus on expanding operations in additional markets, such as Southeast Asia, Europe, Russia, and other regions.
Within seven years of founding, the company’s annual revenue exceeded RMB 100 billion and it has nearly 20,000 employees. Earlier this year the company’s CEO promised that the overall net profit margin will never exceed 5%, and the company will find a way to return the excess above 5% to its users.
The Hong Kong Public Offering will commence at 9:00 a.m. on 25 June 2018 and is expected to close at 12:00 noon (at 11:30 a.m. for White Form eIPO applications) on 28 June 2018. Dealings in the Shares on the Main Board of the Stock Exchange are expected to commence on 9 July 2018, under the stock code 1810.
Lei Jun, executive director, Founder, Chairman and Chief Executive Officer of Xiaomi said:
Today we present ourselves to you as we prepare to enter a new stage in our journey. We are an innovation-driven internet company committed to the principle of ‘amazing products at honest pricing’. Leveraging our unique “triathlon” business model, we maintain excellent design and outstanding quality in our products, while pricing our products as close as possible to cost by selling them to users through highly efficient online and offline new retail channels. We then provide our users with a range of comprehensive and engaging internet services.