China's Xiaomi set to raise $10bn on Hong Kong stock exchange

China's Xiaomi set to raise $10bn on Hong Kong stock exchange

In fact, this was the very reason why Alibaba chose NY exchange for their IPO debut in 2014. According to the reports, Xiaomi plans to utilize 30 percent of the proceeds for its technology business, including Artificial Intelligence (AI) and Internet of Things (IoT).

Xiaomi still depends on China for the majority of its revenues, a challenge given that that market is nearing saturation.

A year ago saw Xiaomi's sales soared by two-thirds to 114.6 billion yuan, thanks to its huge popularity in India and China. Its 2017 revenue surged by 67.5 per cent to $18 billion.

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.

Alongside smartphones, Xiaomi makes dozens of internet-connected home appliances and gadgets, including scooters, air purifiers and rice cookers, although it derives most of its profits from internet services. According to the latest research from market research firm Counterpoint, Xiaomi registered a 134% growth in sales in India and now leads India's smartphone space with 31% of the market share. Domestic rivals Huawei, Oppo and Vivo surpassed Xiaomi in 2016 but the company bounced back to become the world's fourth largest smartphone maker after Samsung, Apple and Huawei. To reach more customers, Xiaomi went physical: it now operates more than 500 brick and mortar retail stores, mostly in China and India.

Yet margins on its smartphones are razor-thin.

Interestingly there's no mention of expanding phone sales to the USA, but Xiaomi has pledged to put 30 percent of its IPO towards growing its presence in Southeast Asia, Europe, Russia "other regions".

According to some analyst estimates, Apple's flagship iPhone X and iPhone 8 have gross margins of around 60 percent.

The company is due to list in July in what could be the biggest IPO since Alibaba floated for $25m in 2014.

Skadden Hong Kong partners Julie Gao and Christopher Betts are leading a team from the USA firm representing Xiaomi, while Chinese firm JunHe is advising the company on domestic law, with offshore firm Maples and Calder handling Cayman Islands advice.

The company said it would have a "weighted voting rights structure", where class A share holders exercise 10 votes while holders of class B shares exercise one vote.

The company says it sells its products in 74 countries and regions.

Xioami has filed for an initial public offering of shares in Hong Kong.

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