The world’s fourth-largest smartphone maker just filed for the world’s largest tech IPO ever

The world’s fourth-largest smartphone maker just filed for the world’s largest tech IPO ever

  • Xiaomi has filed their IPO at the Hong Kong stock exchange (HKEX).
  • The IPO could result in $10 billion for the company.
  • Xiaomi will be implementing dual-class shares.

The Chinese smartphone manufacturer, Xiaomi, has been meaning to go public for a while, and now they’ve finally filed for an initial public offering (IPO) at the Hong Kong Stock Exchange (HKEX). It could potentially raise at least $10 billion for the company, making it the largest listing on any stock exchange by a Chinese technology firm within the last four years.

In the case where the company manages to raise that much through the IPO, Xiaomi will attain a market value of between $80 billion and $100 billion as per reports. If Xiaomi's IPO launch goes as expected, there's a chance that it would be even bigger than Alibaba Group Holding Ltd’s IPO in 2014 which raked in $21.8 billion.

Since the IPO has now been filed, it could launch as soon as June. Prior to the filing, Xiaomi gave investors a good look at its financial health, which according to sources, undersells how well Xiaomi has persevered through the slowdown of growth of the global smartphone market by pushing further into new markets like India.

According to the prospectus presented, the company’s revenue has hit 114.62 yuan ($18 billion, ₹1.19 lakh crore) in 2017, which is 67.5% ahead of where it was in 2016. Even operating profit has increased from 3.76 billion yuan ($590 million, ₹3,999 crore) to 12.22 ($1.92 billion, ₹12,800 crore) billion yuan.

That being said, the company also turned a net loss of 43.89 billion yuan unlike the 491.6 billion yuan of profit in 2016, although a lot of this bears the impact of convertible redeemable preference shares going through fair value changes.

Being listed on the HKEX


Xiaomi will be following the system of dual-class shares, or weighted voting rights (WVR). It allows founding shareholders to retain power even with minority stakes. The company’s application justified applying the structure stating the company would benefit from, “continuing vision and leadership,” which in turn would control the company’s “long-term prospects and strategy.”

The HKEX just altered its rules with the aim of attracting new tech firm listings on its exchange by introducing dual-class listings, a factor that led to the Alibaba Group Holding Ltd preferring to list their IPO on the New York Stock Exchange.

Dual-class listings allow founders to own premium shares that have voting rights that hold up to 10 times more power than that of ordinary shares. The catch is that these premium shares are non-transferrable.

Xiaomi may just shatter the glass ceiling with backers like CLSA, Morgan Stanley and Goldman Sachs Group sponsoring their IPO.