Xiaomi halts Hong Kong trading after record stock placement

[HONG KONG] China's No 2 smartphone maker Xiaomi has suspended trading of its Hong Kong shares after completing the city's largest top-up placement on record.

Xiaomi said in a Hong Kong exchange filing that trading would be halted Wednesday, without giving a reason.

While the company has yet to disclose its stock sale, deal terms obtained by Bloomberg News showed it sold one billion shares in a top-up placement at HK$23.70 each, the bottom of a range, to raise US$3.1 billion. That represents a 9.4 per cent discount to its last closing price of HK$26.15.

A representative for Xiaomi didn't immediately reply to a request for comment on the trading suspension. 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.

Wednesday's premarket auction showed the stock trading as low as HK$24.50, implying a drop of 6.1 per cent.

"We are still figuring out the reason for the suspension," said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. "It's definitely unusual because other companies which had share placements usually file the official announcements soon after pricing. It's hard to know what's going on."

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Xiaomi also fetched US$900 million through the sale of a seven-year, zero-coupon convertible bond, the terms showed. The proceeds will add to a war chest aimed at expanding its market share from competitor Huawei Technologies.

Xiaomi shares have rallied 143 per cent this year. Its stock slipped after it disclosed that its internet services revenue had grown at its slowest pace in three years in the quarter that ended September.

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

The proceeds from the equity placement will be used for business expansion, investments to increase market share and strategic ecosystem investments, the terms showed.

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

BLOOMBERG