Xiaomi shares sink 12% after US$3.1b sale disclosure delay

[HONG KONG] Xiaomi Corp dropped the most ever in Hong Kong after China's No 2 smartphone maker raised US$3.1 billion in the city's biggest top-up placement on record.

The stock declined as much as 12 per cent to $HK23.10 as trading resumed at 1pm local time. Xiaomi's shares were halted during the morning session after the company failed to disclose the placement in time for the open, surprising some market participants.

Xiaomi eventually confirmed it had raised US$3.1 billion selling shares at HK$23.70 apiece - a 9.4 per cent discount to its last close - in a filing released during the midday break.

Proceeds from the share sale and a separate issue of more than US$800 million in convertible bonds will add to a war chest aimed at helping Xiaomi grab market share from competitors such as Huawei Technologies.

The company's failure to announce the stock sale more quickly came about a month after Hong Kong was rattled by an abrupt decision by Chinese regulators to yank Ant Group's planned initial public offering, which would have been the largest ever.

"It's definitely unusual because other companies which had share placements usually file the official announcements soon after pricing," said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong.

Hong Kong's stock exchange requires a company to apply for a trading halt if certain inside information has been made public before an official disclosure. Bloomberg News first reported the deal on Tuesday, a day before Xiaomi's official disclosure.

Xiaomi shares had rallied 143 per cent this year, though they slipped from a high last month after the company said its internet services revenue had grown at its slowest pace in three years in the quarter ended September.

Xiaomi grabbed market share from Huawei Technologies when American sanctions deepened particularly in overseas markets from Europe to India.

Credit Suisse Group, Goldman Sachs Group, JPMorgan Chase & Co and Morgan Stanley arranged Xiaomi's offering.

BLOOMBERG