Xiaomi chooses Hong Kong for $10 billion IPO, eyes $100 billion valuation

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Xiaomi, founded in 2010, has grown quickly on the strength of smartphone handsets priced as low as $115 and Internet-based marketing and distribution.

Xiaomi, the world's no. 4 phone-maker, has filed for what's expected to be the biggest initial public offering globally since 2014 which would effectively boost the company's valuation to almost $100bn-levels, according to people familiar with the matter.

Major reforms in Hong Kong's listing regulations has paid off for the Asian market, with plans of an IPO being announced by technology company Xiaomi. The stock exchange in Hong Kong, which competes with bourses in NY and mainland China, had recently brought in new rules to lure tech firms.

Xiaomi said it will have a weighted voting rights structure. Smartphone industry analysts said there's not much sacrifice involved when it comes to hardware-and the filings show its net profit margin for all businesses, in fact, is now at 4.7%. After seeing falling sales in phones, the company invested in offline retail, building some 200 stores across China.

Xiaomi started life eight years ago selling Apple imitations at half the price of the real products, although it has now expanded into making home products such as rice cookers and air conditioners.

Bloomberg reported that Xiaomi has picked China's Citic Securities to handle its issuance of Chinese depositary receipts (CDR), which is most likely to come after its Hong Kong IPO.

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In the IPO filing, Xiaomi founder Lei Jun emphasized that Xiaomi is an internet company, not just a hardware maker.

The prospectus gave investors the first detailed look at Xiaomi's financial health ahead of the IPO, showing resilience in a slowing global smartphone market thanks partly to a push into overseas markets like India. Excluding those, operating profit reached 12.2 billion yuan.

Xiaomi posted a 43.9 billion RMB ($6.9 billion) loss in 2017 on account of issuing preferred shares to investors (54 billion RMB) but the growth story is healthy.

Since the IPO has now been filed, it could launch as soon as June.

Xiaomi has a presence in over 30 countries. 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.

Previous year saw Xiaomi's sales soared by two-thirds to 114.6 billion yuan, thanks to its huge popularity in India and China.