Daily Management Review

Xiaomi to hold one of the largest IPOs in the high-tech sector


05/04/2018


The Chinese manufacturer of smartphones Xiaomi has applied for an initial public offering of its shares on the Hong Kong Stock Exchange. The former start-up, created just eight years ago by Chinese ex-employees of Google and Motorola, can attract up to $ 10 billion on the exchange, and investors can estimate the whole company at $ 100 billion.



Maurizio Pesce
Maurizio Pesce
A statement filed by Xiaomi on the Hong Kong Stock Exchange reads that the company intends to conduct an initial public offering through intermediation of financial advisers represented by the Chinese investment company Citic and American banks Goldman Sachs and Morgan Stanley. The IPO is planned in 2018, but exact terms are not reported. The company keeps silent about how much they plan to attract, but according to Chinese and American media, Xiaomi aims to raise about $ 10 billion, and investors can estimate the whole company at $ 100 billion.

The first product of the manufacturer was software for the mobile OS Android version 2.2., called MIUI, which was inspired by Samsung and Apple’s OS. The company introduced its first smartphone in 2011. It was Xiaomi Mi1 priced at $ 300, which, having an uncanny plastic appearance, had a functionality comparable to more expensive iPhone and Samsung. Not surprisingly, the first batch of Xiaomi Mi1 in the amount of 150 thousand pieces was sold in a matter of minutes. The success investors' interest in Xiaomi and a few months later the company first attracted $ 90 million, and then $ 215 million.

In 2012, the company introduced its second smartphone and since then has been issuing 1-2 new items each year. At some point, competition in China became very tough, so in April 2015, Xiaomi entered the neighboring Indian market, where the local population, often simply not having the means to buy an iPhone or Samsung, appreciated the functional Chinese product. In June of the same year Xiaomi entered the multimillion Brazilian market, gradually strengthening its positions in densely populated but poor countries - Bangladesh, Pakistan, etc. By the end of 2017, Xiaomi became the most popular smartphone in India, surpassing Samsung, and by the results of the first quarter of this year Xiaomi has firmly established itself among the top five smartphone manufacturers around the world - together with Apple, Samsung and two other Chinese manufacturers Huawei and Oppo.

Observers point out that if Xiaomi's IPO turns out to be successful and the company attracts the desired $ 10 billion, this placement can become not only the largest IPO in the world this year, but also the third largest IPO in the history of the high-tech sector. The first line is held by another Chinese giant, Alibaba, which in 2014 collected $ 25 billion for its shares. In second place is Facebook's IPO in 2012, when $ 16 billion was raised.

source: bloomberg.com






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