Daily Management Review

Chinese billionaires to invest in Xiaomi IPO


06/26/2018


The three wealthiest people in China decided to invest in Xiaomi’s IPO that will be held in the near future, Bloomberg reported, citing sources.



jonrussell
jonrussell
The company has already started collecting applications from institutional investors and plans to attract a total of about $ 6 billion.

According to Bloomberg sources, the Chinese billionaire Li Ka-shing, who previously headed the board of the Hong Kong conglomerate CK Hutchison Holdings, is going to purchase Xiaomi securities for $ 30 million. In addition, Alibaba founder Jack Ma and chairman Board of Directors of Tencent Pony Ma also decided to invest in the shares of a promising Chinese vendor. The amounts of their potential investments are still unknown.

According to Hong Kong Economic Journal, Lee Ka-shing can provide funds through his Foundation. As for Jack Ma and Pony Ma, it is not yet clear via what structures of their companies they plan to purchase Xiaomi shares.

In addition to the three most affluent people in China, other major investors intend to participate in the financing of Xiaomi. According to Bloomberg, among them are China Mobile's leading mobile operator and American chip maker Qualcomm. 

Xiaomi is going to sell 2.18 billion of its shares under the listing at a price of 17 to 22 Hong Kong dollars ($ 2.17-2.8) apiece. IPO Xiaomi's underwriters will be CLSA Ltd., Goldman Sachs Group Inc. and Morgan Stanley. Among the financial companies that are also involved in the organization of the IPO are Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co., and six Chinese banks.

Last June, Xiaomi CEO became the first to apply for an IPO in Hong Kong after the city exchange simplified the listing rules in April. According to Bloomberg, the deal could become the world's largest share sale since September 2016, when the Postal Savings Bank of China Co. raised $ 7.6 billion to sell shares in Hong Kong. 

Earlier, Xiaomi postponed plans to issue Chinese depository receipts (CDRs) on the Shanghai Stock Exchange for $ 5 billion. "We will first implement a listing in Hong Kong, and then consider the prospects of issuing Chinese depositary receipts on the mainland," the company explained.

At the same time, it is not specified how long the release of the CDR may be postponed. In turn, the stock market regulator of the PRC noted that it respects the decision of Xiaomi, and on that basis cancelled consideration of the relevant application on Tuesday, June 19.

Earlier, Bloomberg reported that investors could estimate the whole company at $ 100 billion. However, according to Reuters, its capitalization has been reduced to $ 55-70 billion. "Xiaomi lowered the likely valuation of the company to $ 55-70 billion after its decision to postpone the offer of shares in the mainland China before the IPO in Hong Kong, "- explained the sources of the agency. According to them, the company's decision to postpone the IPO in mainland China is due to disagreements with regulators over the valuation of Chinese depositary receipts.

Xiaomi reported that the funds received as a result of entering the exchange will be spent equally on research and development, development of Internet products of things and other areas that will help the Chinese vendor to strengthen its software platform and international expansion.

source: bloomberg.com






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