Xiaomi Might Be The First Chinese Unicorn to List on HKEx after The Introduction of Dual-Class Shares

Huami, the world’s No.1 wearable device company backed by Xiaomi, is likely to get listed before Xiaomi.

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Xiaomi Might Be The First Chinese Unicorn to List on HKEx after The Introduction of Dual-Class Shares

Though Xiaomi has kept its lip sealed on a much-rumored public listing, developments have been circulating in town every once in a while.

The latest word on the street is that the Beijing-based company has selected GoldMan Sachs, Morgan Stanley, Credit Suisse and Deutsche Bank for its planned IPO and is also considering Chinese underwriters, according to 36Kr’s source familiar with the matter.

Bloomberg previously reported that the smartphone manufacturer among many other things targets a valuation of as much as US$100 billion. The timing and location for the IPO are yet to decide.

Image credit to 123rf.com.cn.

One of the location options is Hong Kong Exchanges and Clearing.

After losing out on Alibaba’s record-breaking listing to New York in 2014 as the exchange adopts a strict one-share-one-vote principle while Alibaba was looking at a more flexible governance structure, HKEx proposed to its regulator for the permission of dual-class shares.

Now as the Hong Kong government comes close to allowing the controversial dual-class shares structure, Xiaomi is very likely to become the first Chinese unicorn to list on the Hong Kong bourse after the change of rule.

Under Lei, Xiaomi achieved an RMB 100 billion (US$15.54 billion) revenue by October 2017. The total shipment for its smartphone stands at the fifth worldwide.

Image credit to 123rf.com.cn.

At the same time, the Beijing-based company has finally consolidated its position in emerging markets like India and Russia. It is now the top smartphone brand in India, holding a market share of 23.5%. It has also become the 5th largest smartphone brand in Russia during Q3 2017.

Apart from smartphones, Xiaomi is backing more than 70 startups in its hardware ecosystem, churning out a wide range of products from wearable devices to rice cookers.

In 2017, Xiaomi ecosystem companies generated RMB 20 billion in revenue (around US$2.1 billion) according to Bloomberg.

Actually, one Xiaomi ecosystem company might get listed ahead of its parent. Huami, the world’s largest wearable device brand within the ecosystem, has filed for a Nasdaq IPO and will possibly get listed before Xiaomi. This might have a huge impact on Xiaomi’s market valuation, as Xiaomi ecosystem now plays a vital role in the company’s business.

Xiaomi band.

For example, Xiaomi’s air purifier manufacturer Zhimi is valued at US$1 billion in 2016. Ninebot, a self-balancing scooter producer, has received US$180 million in total from investors including Sequoia Capital. Earphone manufacturer 1More is currently eyeing a back door listing in China.

If successful, Huami will become the first company in Xiaomi ecosystem that trades publicly. The company has made a net revenue of RMB 23.94 million (around US$3.71 million) in 2016 and the number hit RMB 95.37 million (around US$14.8 million) in the first three quarters in 2017.

Lei Jun’s Shunwei Capital and Xiaomi hold respectively a 20.4% and 19.3% stake in Huami.