Xiaomi reportedly to file for HK IPO next week, fetching a valuation of $110 billion

Ant Financial, Didi Chuxing, Meituan-Dianping are also said to mull IPOs. 

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Xiaomi reportedly to file for HK IPO next week, fetching a valuation of $110 billion

Xiaomi, China’s #4 largest smartphone manufacturer by shipments, is likely to file for a blockbuster IPO in Hong Kong next week, according to local media HKET. The tech unicorn is reportedly hoping to fetch a valuation of US$110 billion, despite the backdrop of overall price falls for tech stocks including Tencent and Facebook this year.

According to market intelligence firm Dealogic, the global IPO volume of 2017 was $199.2 billion.

The valuation inflation of Xiaomi may be rampant, in part because the company managed to buck the trend of hard-landing in shipments. While smartphone shipments in China suffer from a more than 21% annual decline, the biggest drop to date, in Q1 2018, Xiaomi grow its shipments by 37% and outperformed Apple to rank the forth during the same period, according to a report by market analyst firm Canalys.

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Image credit to 123rf.com.cn.

Another reason why Xiaomi is aiming high is that LEI Jun, founder of Xiaomi, defines his company as an internet company just as Alibaba and Tencent, instead of branding Xiaomi as a mere smartphone manufacturer. In fact, the revenue generated from internet services, such as its android Rom MIUI, cloud service, and financial services, has reportedly contributed to 68% of Xiaomi’s total revenue last year. Besides, LEI Jun just pledged earlier this week that his company will “forever limit” the profit margin for hardware businesses to a maximum of 5 percent, echoing his pursuit of growth in internet businesses.

Apart from Xiaomi, an army of Chinese tech companies are stampeding towards IPOs, including the country’s largest ride hailer Didi Chuxing, the world’s largest O2O e-commerce platform Meituan-Dianping, and Alibaba’s financial affiliate Ant Financial. Including Xiaomi, the total valuation of these four companies is likely to reach an eye-popping US$ 400 billion.

On Tuesday, Hong Kong Exchanges and Clearing Market announced it will accept companies with dual-class shareholding structure to file for flotations on April 30, meaning Xiaomi could be the first Chinese tech unicorn to list in the city after one of the biggest reforms in HKEX’s history.