Despite the hiccups with the CDR mainland fundraising, Chinese smartphone maker, Xiaomi is well on its way to launch its IPO next Monday at the Hong Kong Exchange.
The company just updated its prospectus with HKEX (Hong Kong Exchanges and Clearing) to raise as much as US$ 6.1 billion in an imminent floatation, Bloomberg reported citing people familiar with the matter.
According to the updated prospectus, Xiaomi’s nominal value of US$ 675,000 consists of both Class A shares and Class B shares, worth respectively RMB70 billion ($175,000) and RMB200 billion ($500,000).
Xiaomi intends to issue 2.18 billion shares into the market. The offer price will be between HK$17 to HK$22 per stock.
Expectedly, after the huge saga over the ‘right’ valuation for Xiaomi, its first bloated IPO figure of $100 billion has trickled down to a tentative $6.1 billion (HK$480 billion), people with the knowledge told Bloomberg. This effectively still makes this IPO the largest over the past 2 years.
Some of the cornerstone investors include China’s largest wireless carrier – China Mobile Ltd, the U.S wireless-chip giant – Qualcomm Inc and CDB Private Equity. These investors will likely purchase up to 13 to 15 percent of the shares on offer, per people close to the matter.
It’s important to highlight that this massive IPO might not be timely, given the ongoing uncertain ‘trade war’ between the U.S and China. Hong Kong, after all, is still part of China and the USD-RMB rates have long started to influence Hong Kong interest rates more and more since 2005.
As we speak, the Hong Kong interbank rates has upped consecutively over the past 16 sessions, hitting a new high of 1.77822 percent – fueling speculations whether Hong Kong funds will be drained by huge IPOs like Xiaomi.
In this regard, this might put a dampener to Chinese on-demand service provider, Meituan-Dianping’s incoming IPO plans – with Xiaomi getting to be the first to list right after the new Hong Kong listing rules revamp.
However, Xiaomi is definitely not short of supporters – with CMB International’s private equity arm and China Merchants Group in close discussions to invest potentially HK$1.5 billion and HK$220 million into Xiaomi respectively.
Furthermore, the company will begin opening the book to institutional investors as early as today.