HONG KONG: The Chinese smartphone maker Xiaomi Corp says it hopes to raise around US$6.1 billion in its initial public offering in Hong Kong, which will be the territory's biggest IPO in two years.
Xiaomi will offer about 2.18 billion shares at an indicative price range of HK$17 to HK$22 per share, representing a market capitalisation of US$54.3 billion to US$70.3 billion, according to the prospectus.
"We have a unique business model that combines hardware, e-commerce and internet services, which will provide profit and sustained development capabilities never seen before," founder and chief executive officer Lei Jun told reporters. "We are a new species and we owe our success to this model."
Founded in 2010 and describing itself as an "internet company", although the majority of its profits came from smartphone sales, Xiaomi sells over 100 kinds of products ranging from smartphones to set-top TV boxes to internet-connected home appliances at low prices in around 70 countries. It booked operating revenue of 114.6 billion yuan (US$17.6 million) last year, up 67% from 2016.
"Our strength is in pricing and we aim to keep a low profit level. While we have been lowering revenue from smartphone sales to 70%, we expect in eight to 10 years, revenue from the internet of things products will contribute to about 50%," Lei said.
Xiaomi's listing will be the biggest in Hong Kong since Postal Savings Bank of China raised US$7.4 billion two years ago, and the biggest tech IPO in the world since Alibaba's $25-billion New York listing in 2014.
Xiaomi will also be the first issuer to take advantage of Hong Kong's new rules on dual-class shares, under which two classes of common stock with unequal voting rights are allowed. Alibaba has said it picked New York over Hong Kong because dual-class shares were not allowed then.
Seven cornerstone investors, including the mainland telecommunication service provider China Mobile, the state-backed investment firm CICFH Entertainment and the US chipmaker Qualcomm, have agreed to take up US$550 million in shares.
Xiaomi plans to use the funds raised for product research and development, strengthening capabilities related to the internet of things, global expansion and working capital.
The company on Tuesday announced it was postponing its original plan to raise more than US$5 billion by issuing Chinese depository receipts on the mainland while seeking a listing in Hong Kong.
"We have no immediate plan for when to issue CDRs," chief financial officer Chew Shouzi said. "We will have discussions with [the China Securities Regulatory Commission] before coming to a decision to put it on hold."
Public subscriptions for the IPO will open from Monday through Thursday. Trading is scheduled to start on July 9.