[HONG KONG] Xiaomi Corp., the Chinese smartphone maker that was once the most valuable startup in the world, is in talks with investment banks about an initial public offering and seeking a valuation of at least US$50 billion, according to people familiar with the matter.

The Beijing-based company is considering an offering as soon as next year with banks suggesting Hong Kong as the most likely destination, said the people, requesting not to be named because the matter is private. While banks have talked up Xiaomi's prospects as they seek to win the mandate, they have concerns about whether the company can reach the US$50 billion level, much less a US$100 billion target that some top executives have embraced, the people said. Xiaomi last raised money in 2014 at a US$46 billion valuation.

Xiaomi has gained momentum in recent months after stumbling against local rivals such as Huawei Technologies Co. and Oppo. The company, led by Lei Jun, has invested aggressively in retail stores and in India. It's now on the verge of surpassing Samsung Electronics Co. in the country, the world's fastest growing smartphone market. A successful IPO may bring it at least US$5 billion, much-needed ammunition for expansion, the people said.

Kaylene Hong, a Xiaomi spokeswoman, says the company does not comment on IPO matters. Over the weekend, Mr Lei denied a report in The Information that Xiaomi is considering an IPO as early as the second half of 2018, according to Sina.com.

Founded in 2010, Xiaomi, or Little Rice, made its mark with buzzy online marketing campaigns, eschewing traditional retail stores. By 2014, its formula of flash sales and savvy social media helped it top Chinese smartphone rankings and amass the valuation that made it briefly the highest in the world, before it was surpassed by Uber Technologies Inc. Mr Lei, who often sported black turtlenecks, was compared with Apple Inc.'s Steve Jobs.

But Xiaomi stumbled last year, with shipments plunging against fierce local competition. The company ranked only fifth in Chinese phone shipments in the first quarter, according to research firm IDC. Oppo and counterpart Vivo punished the company by developing strong ties with retailers in small towns and rural areas of China.

Mr Lei has revived the company by expanding its product line, geographic reach and sales channels. Xiaomi is making a major push into old-fashioned retail: it plans to build 1,000 "Mi Home" stores by 2019 - about twice Apple's global store count - targeting 70 billion yuan (US$10 billion) of retail sales by 2021.

Mr Lei has also bet heavily on overseas expansion, especially in India. In an interview in March, he said Xiaomi would double its investment in the country, spending another US$500 million over the next three to five years.

Xiaomi's new Redmi Note 4 sold about 250,000 units within minutes on India's top online retailer Flipkart.com as well as its own online site, the company said. The Beijing-based company hit US$1 billion in Indian revenues for 2016.

Xiaomi is now focusing on a selection of emerging markets including Russia and Indonesia. The company has said it also intends to establish a presence in the U.S., where it's held off on selling phones in favor of devices such as fitness bands. Xiaomi is now aiming to ship 100 million smartphones next year, reviving a target it had abandoned during its difficult days.

"We faced many challenges. Many negative reports about us," Mr Lei said during the March interview. "But it was never as bad as it was made out to be. We have gone back to healthy growth. We will resume rapid growth in the next two years."

BLOOMBERG