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Xiaomi targets as much as US$6.1b in HK IPO: sources

Hong Kong

CHINESE smartphone maker Xiaomi Corp is planning to raise up to US$6.1 billion from a Hong Kong IPO launching this week, people with knowledge of the matter said, in what will be one of the biggest tech floats globally of recent years.

Xiaomi, which also makes Internet-connected devices, plans to sell about 2.18 billion shares, including about 65 per cent primary shares in its initial public offering (IPO) at a price range of HK$17 to HK$22 (S$2.94 to S$3.80) each, said two of the people.

The Beijing-based, Cayman-domiciled company plans to bring in eight cornerstone investors including US chipmaker Qualcomm Inc, Chinese express delivery company SF Holding Co Ltd, domestic telecom service provider China Mobile Ltd and state-run conglomerate China Merchants Group Ltd, according to the people.

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The cornerstone investors are expected to buy about 13 to 15 per cent of the shares being offered in the IPO, the people said. The line-up of cornerstone investors could be changed before the company takes orders from retail investors on Monday.

The company will open the book to institutional investors on Thurs-day, they added.

Xiaomi, China Mobile and China Merchants Group declined to comment. Qualcomm and SF Holding did not immediately respond to requests for comment. All the people declined to be identified as the information was not public.

Xiaomi lowered its likely valuation to a range of US$55 billion to US$70 billion following its decision to delay its mainland share offering until after its Hong Kong IPO, Reuters reported on Tuesday.

The delay was triggered by a dispute between the company and regulators over the valuation of its China depositary receipts (CDRs), sources said, casting doubt on Beijing's efforts to lure foreign-listed Chinese tech giants back home.

Xiaomi had been expected to raise up to US$10 billion, split between its Hong Kong and mainland offerings. The delay to its CDRs is a blow for Chinese officials, who designed them as a means for China to compete globally for major tech listings and give mainland investors access to the country's tech champions.

Xiaomi's blockbuster Hong Kong offering, on the other hand, is set to be the first listing under new exchange rules designed to attract tech floats, as competition heats up between Hong Kong, New York and the Chinese mainland.

China's largest provider of on-demand online services, Meituan-Dianping, also plans to file for a Hong Kong IPO later this week, which would be the city's second multibillion-dollar tech float this year, the people said.

Xiaomi was set up in 2010 and doubled its smartphone shipments in 2017 to become the world's fourth-largest maker, showed data from Counterpoint Research, defying a global slowdown in smartphone sales.

CLSA, Goldman Sachs and Morgan Stanley are joint sponsors for Xiaomi's Hong Kong IPO. REUTERS