China-based consumer electronics manufacturer Xiaomi has secured seven cornerstone investors including several corporates for an initial public offering sized at up to $6.1bn, Reuters reported today citing a term sheet.
The investors include mobile semiconductor producer Qualcomm, telecommunications firm China Mobile, logistics service provider SF Express, government-owned conglomerate China Merchants Group and investment firm CICFH Entertainment.
The seven will jointly buy 10% of the shares in the offering, which will take place on the Hong Kong Stock Exchange. Xiaomi has set a range of HK$17 to HK$22 ($2.17 to $2.80), which would raise between about $4.7bn and $6.1bn.
Founded in 2010, Xiaomi is best known for its affordable smartphones but has branched out into a wide range of electronics products including televisions, personal audio equipment, chargers, wearables and smart home devices.
The company achieved its 2017 revenue target of RMB100bn ($15.8bn at the time) but generated a $6.9bn net loss at the same time. It booked a further $1.1bn net loss in Q1 2018.
Xiaomi had originally intended to target $10bn from a dual offering in Hong Kong and the Chinese city of Shanghai, but decided earlier this week only to float in Hong Kong, before issuing Chinese Depositary Receipts in Shanghai sometime in the future.
Qualcomm and China Mobile had discussed investments of $100m each while SF Express was looking to buy $30m of shares, people with knowledge of the matter told Bloomberg yesterday. Xiaomi intends to begin taking firm orders for shares today.
The company has raised at least $1.5bn in funding and its last round, in which it raised $1.1bn from DST Global, GIC, Hopu Fund, All-Stars Investment and Yunfeng Capital in 2014, valued it at $45bn. The offering would value it at $55bn to $70bn depending on the IPO price.
Other Xiaomi investors include Qualcomm and NGP Capital, which is backed by communications equipment maker Nokia, each of which own a stake smaller than 0.1%, as well as Morningside Venture Capital, Qiming Venture Partners, Temasek and IDG Capital.
CLSA, Goldman Sachs and Morgan Stanley are joint sponsors for the IPO, according to a stock exchange filing. Credit Suisse, Deutsche Bank, JPMorgan Chase and six China-based banks are also underwriters, sources told Bloomberg.
– Image courtesy of Xiaomi.