Xiaomi seeks up to US$4b in shares, convertible bonds

[BEIJING] China's No 2 smartphone maker Xiaomi is seeking to raise as much as US$4 billion from a combined share placement and sale of convertible bonds, adding to a war chest aimed at expanding its market share from competitor Huawei Technologies.

Xiaomi is selling 1 billion shares in a top-up placement to raise as much as US$3.2 billion, according to terms of the deal obtained by Bloomberg News. The shares are being offered at HK$23.70 (S$4.1) to HK$24.50 each, representing a 6.3 per cent to 9.4 per cent discount to its closing price of HK$26.15 on Monday. It's Hong Kong's largest top-up placement on record, data compiled by Bloomberg show.

Xiaomi is also seeking US$855 million through a seven-year, zero-coupon convertible bond, the terms show. The conversion premium is set at 42.5 per cent to 52.5 per cent above the reference share price, which will be the offering price of the equity placement.

Xiaomi shares had been on a rally this year, rising 146 per cent from a year ago. However its stock slipped after it disclosed that its internet services revenue had grown at its slowest pace in three years in the September quarter. 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.

BLOOMBERG

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