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Home / Business / Xiaomi records Hong Kong IPO at the lower end of the target range

Xiaomi records Hong Kong IPO at the lower end of the target range



HONG KONG Chinese smartphone maker

Xiaomi
Corp.

According to those familiar with the matter, despite investors' skepticism about their growth prospects, one of the largest IPOs in 2018 was conducted.

On Thursday, the Eight-Year-Old Company His offer was $ 17 Hong Kong dollars ($ 2.17) per share, following last week's target of $ 17-22 Hong Kong. Xiaomi shares will be traded on July 9 in Hong Kong.

Beijing-based Xiaomi hoped to receive up to $ 6.1

billion from its IPO before trading began. Pricing gives the company a market valuation of around $ 54 billion. This is a sharp fall from expectations earlier this year for a $ 100 billion valuation, and less so for the $ 65 to $ 85 billion that Xalyomi had estimated by several brokerage analysts.

The company had difficulties en route to the IPO. Xiaomi's offer began at a turbulent time for Chinese stocks, which were weakened by concerns over China's escalating trade dispute with the US

In addition, some analysts and potential investors, when it came to Xiaomi's business prospects, never bought into the company's narrative It is primarily an Internet company. Instead, some indicated that they saw Xiaomi as a hardware company that usually commands lower multiples.

Investors in the IPO include Hillhouse Capital Group, an investment firm specializing in the Chinese market, which invests around $ 600 million in mutual fund giant Capital Group Cos. With around $ 500 million and billionaire invested

George Soros,

said a person familiar with the situation.

Goldman Sachs Group
Inc.,

Morgan Stanley

and CLSA led the stock sale.

U.S. Chip giant

Qualcomm
Inc.

and state telecommunications company

China mobile device
Ltd.

formerly required to buy some shares in the initial public offering. Cornerstone investors in Hong Kong are involved to boost demand, among other things.

Smartphones are Xiaomi's biggest source of revenue, although the company also sells Internet-connected devices such as rice cookers and fitness bands. It also makes money from Internet services such as video streaming and financial services. The company wants to make more profit with its connected devices and software.

In May, Xiaomi said sales increased 68% to 114.6 billion yuan in 2017. She reported a net loss of about 43.9 billion yuan, excluding non-recurring expenses, which had a profit of 5.4 billion yuan.

Earlier, Xiaomi was planning to become the first company to participate in China's new depository deposit program designed to allow foreign companies to record on mainland China. Xiaomi, based in the Cayman Islands, has earlier this month submitted plans to place at least half of its IPO in Shanghai.

But she canceled these plans only days later, because the details of the rules for depository receipts and disagreements with regulators about the size of the bid were uncertain, said the persons familiar with the discussions. Regulators wanted Xiaomi's shares to be listed lower to ensure a significant first-day trading performance, as well as a good post-IPO performance to boost confidence in the new program, these people said, adding that Xiaomi's executives are requesting contradicted.

Dozens of Chinese technology unicorns – private companies valued at more than $ 1 billion – who intend to go public in Hong Kong or New York closely monitor Xiaomi's initial public offering, people familiar with the matter said. Some of these companies might reconsider the timing of their lists, depending on how Xiaomi's stock will trade in the coming weeks, people added.

Another of China's most valuable technology startups, online service provider Meitanan Dianping, has requested this week in Hong Kong. The company, which valued retail investors valued at around $ 30 billion last year, could raise around $ 6 billion as part of its IPO, the people familiar with potential equity sales said. It targets a market valuation of more than $ 60 billion, the Journal reported.

Write to Julie Steinberg at julie.steinberg@wsj.com and Stella Yifan Xie at stella.xie@wsj.com


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