Xiaomi aims to raise $6.1bn in Hong Kong IPO
Xiaomi has set tentative terms for the world’s biggest initial public offering in nearly two years, aiming to raise as much as $6.1bn in Hong Kong, people familiar with the matter said.
The Chinese smartphone maker and existing investors plan to offer 2.18-billion shares at between HK$17 ($2.17) and HK$22 apiece, according to the people, who asked not to be identified because the information is private. China Mobile, the nation’s biggest wireless carrier, and US wireless-chip giant Qualcomm are among companies in talks to become cornerstone investors, the people said.
Beijing-based Xiaomi aims to start taking orders from institutional investors as soon as Thursday, the people said.
Xiaomi, led by serial entrepreneur Lei Jun, was the first to file for a Hong Kong IPO with a weighted-voting rights structure after the city’s bourse changed its rules in April.
The deal could become the world’s biggest first-time share sale since September 2016, when Postal Savings Bank of China raised $7.6bn in a Hong Kong IPO, data compiled by Bloomberg show.
TRADE TENSIONS
The Hong Kong dollar strengthened 0.04%, the biggest intraday advance in nearly two weeks, to HK$7.8462 per US dollar in early evening trade on Wednesday. The one-month interbank rate rose four basis points to 1.77822%. That benchmark, known as Hibor, has climbed for 16 consecutive sessions to reach the highest level since 2008 amid concerns funds will be drained by large IPOs in the city.
China Mobile and Qualcomm have been discussing potential investments of about $100m each in the Xiaomi IPO, the people with knowledge of the matter said. An affiliate of Chinese express delivery firm SF Holding is in talks to buy about $30m in stock, the people said.
CMB International’s private equity arm has been discussing a potential HK$1.5bn investment, while an investment fund run by China Development Bank is in talks to buy HK$518m of shares in the Xiaomi offering, the people said. A fund backed by China Merchants Group is negotiating the purchase of about HK$220m in stock, they said.
Qualcomm, whose Snapdragon chips have been used in Xiaomi’s flagship phones, is preparing to buy stock in the IPO amid increasing trade tension between China and the US. It has also been waiting for formal acknowledgment that Chinese antitrust authorities have approved its $43bn acquisition of NXP Semiconductors.
Qualcomm’s venture capital arm is an existing investor in Xiaomi, its website shows.
CHINESE INVESTORS
Xiaomi was earlier planning to seek about $10bn combined from the Hong Kong IPO and a near-simultaneous offering to mainland Chinese investors.
It has since delayed its plan to float so-called Chinese depositary receipts in Shanghai, which was part of the government’s long-term goal of getting its biggest technology companies to list locally.
The company aimed to finalise the list of cornerstone investors on Wednesday, the people said. Details of Xiaomi’s offering, including the amount of stock to be bought by each cornerstone investor, could still change before the deal launches, the people said.
Representatives for Xiaomi, China Mobile, Qualcomm and CMB International declined to comment, while a person who answered the phone at SF Holding’s office in Shenzhen declined to transfer calls.
Representatives for the other cornerstone buyers said they could not immediately comment or could not be reached.
CLSA, Goldman Sachs Group and Morgan Stanley are leading Xiaomi’s Hong Kong IPO as joint sponsors, according to a May exchange filing. Credit Suisse Group, Deutsche Bank, JPMorgan Chase and six Chinese banks are also helping to arrange the share sale, sources said.