Xiaomi kicked off what is set to be one of the world’s biggest initial public offerings to raise up to $10bn, filing a prospectus that gives investors their first look at the Chinese handset maker’s financials. It is due to list in early July.
Xiaomi made an operating profit of Rmb12.2bn ($1.9bn) last calendar year, triple the previous year. After deducting the cost of redeeming convertible preference shares held by investors that became a pre-tax net loss of Rmb41.83bn.
The numbers also show that, Xiaomi’s phoenix-like rise from its nadir notwithstanding, the company continues to burn through cash, to the tune of Rmb995.67m last year.
Proceeds from the IPO, which analysts and bankers expect to value the company short of the $100bn originally touted, will be split in roughly equal parts between research and development, investments in the internet of things and other areas designed to boost its software platform, and global expansion. It has already invested in over 90 IoT and lifestyle companies and has become the top smartphone seller in India, with a 31 per cent market share according to Canalys.
The flotation would be one of the first to take advantage of changes to HKEX’s listing regime, made last month, which allow for companies to list with weighted voting rights for the first time.
Another banker working on the deal recently told the FT that HKEX wanted Xiaomi to “be the poster child of its new regime”.
While the company began life as a cheaper iPhone it has since expanded into home products, like rice cookers and air conditioners, and developing a mini-platform offering entertainment and other apps – aping the model adopted by the likes of Apple and, in China, Tencent and Alibaba.
Lei Jun, co-founder and chairman, never one to shrink from hyperbole, introduced the company in the prospectus by saying “We have changed how hundreds of millions of people live, and we will become a part of the lives of billions of people globally in the future.”