HONG KONG (Reuters) – Chinese smartphone maker Xiaomi Corp. ( IPO-XMGP.HK ) said on Saturday there was no timeframe for a stock offering on the mainland, leading Beijing's efforts to top Chinese foreign -Gigants listed at home.
Xiaomi was expected to raise up to $ 10 billion, split between Hong Kong and mainland deals. But in a startling move this week, it suspended its scheduled stock offering until it ends its planned July 7 listing in Hong Kong.
It was not said when the process of issuing Depositary Receipts (CDRs) will resume in China or why the offer has been postponed on the mainland.
Reuters reported that the decision was mainly due to a dispute between the company and Chinese regulators over the evaluation of its CDRs, but the company denied this.
"We have had many discussions with regulators and have reached consensus that, to ensure the quality of our CDR issues, we first go public in Hong Kong," said Shou Zi Chew, Xiaomi's Chief Financial Officer. told a press conference in Hong Kong.
Xiaomi, which also makes Internet-connected devices, has awarded its CEO and co-founder Lei Jun $ 1.5 billion worth of shares for its contribution to the company, said one of the largest in an updated regulatory filing this week one-off share-based company premiums in years.
The $ 1.5 billion shares that were granted to Lei's holding company – Smart Mobile Holdings Ltd – were acquired by Xiaomi on April 2, a month before the filing of the blockbuster IPO in Hong Kong , as a share-based payment expense.
Xiaomi is the latest high-profile company that has given its executives high stock prices in recent years before the IPO.
Lin Lin, co-founder and president, defended the Board of Management's decision on the stock compensation at the press conference.
"Many new-economy companies have paid their CEOs or CEOs stock exchanges before going public, and Xiaomi is not the first and will not be the last," he said.
Lin added that Xiaomi's board unanimously approved the stock price for Lei who "did not know about it".
Chinese e-commerce powerhouse JD.com awarded CEO Richard Liu's $ 900 million worth of stock to the company's IPO before its New York Stock Exchange in 2014.
Xiaomi has placed $ 548 million of seven cornerstones US chip maker Qualcomm Inc ( QCOM.O ) for its IPO in Hong Kong, Reuters reported Thursday.
The offer is said to be the first listing under the new stock market rules aimed at attracting tech floats as competition between Hong Kong, New York and Mainland China intensifies.
It sells about 2.18 billion shares at a price range of HK $ 17 to HK $ 22 ($ 2.17 to $ 2.80) each, which is a multiple of the 22.7-29.3-fold gain in 2019 which is forecasted by its emission consortium.
The IPO estimates the Beijing-based Cayman-based company at $ 54.3 billion – $ 70.3 billion after a 15 percent "over-allotment" option that can be sold on demand. If the greenshoe is exercised, Xiaomi's free float will amount to 9.99 percent of its extended share capital.
The new valuation range is well below the $ 100 billion that has been touted by sources this year and the recent $ 70 billion valuation target that some analysts and investors consider aggressive.
CEO Lei said he expects to expand his product range and international market presence. Xiaomi's phones are sold in 74 countries.
"I agree that the smartphone market will grow slowly over the next 10 years, but it's still a huge market," Lei said.
The company, founded in 2010, doubled its smartphone shipments in 2017, claiming to become the world's fourth-largest maker, according to Counterpoint Research.
Xiaomi also makes dozens of home appliances and gadgets with Internet access, including scooters, air purifiers, and rice cookers.
Reporting by Julie Zhu and Sijia Jiang in Hong Kong; Additional reporting by Fiona Lau from IFR; Cut by Anne Marie Roantree and Stephen Coates