SEOUL: Xiaomi Corp said it seeks to raise up to $6.1 billion in its initial public offering next week that would value the Chinese smartphone maker at as much as $70.3 billion.
The details of the Hong Kong IPO released Saturday show the Beijing-based company will raise less than an earlier expectation of up to $10 billion that would have valued the company at $100 billion. But it will still be among the biggest tech IPOs since Chinese e-commerce giant Alibaba raised $21.8 billion in 2014.
Xiaomi founder, chairman and CEO Jun Lei speaks at a news conference in Hong Kong on Saturday.(AP photo)
Xiaomi shares will start trading on the stock exchange in Hong Kong on July 9 under the ticker of 1810.HK after public offering 2.2 billion shares to institutional investors next week at the offer price between HK$17 to HK$22 ($2.2 to $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. It unseated Samsung Electronics in Indian smartphone market and Apple in China. It is also one of the few Chinese companies that succeeded in global markets such as India while making fans in places like South Korea.
The IPO means Xiaomi, a self-claimed internet company, is stepping up its game in the international markets while trying to reduce its revenue reliance on smartphone sales, which accounted for 70% 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. 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, the company said.
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.
The company said it plans to raise its reliance on businesses other than handsets, such as its internet services for consumers using its robot vacuum cleaners, air purifiers, rice cookers and various internet-connected devices called internet of things, or IoT.
"Xiaomi targets the revenue proportion from IoT services to increase to 40% to 50% 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% of the company's revenue.