Xiaomi applies for IPO in Hong Kong with dual-class shareholding structure


Xiaomi, which is expected to reach a value of about US$10 billion through the IPO, will become one of the top tech firms by market value. It made a net loss of 43.89 billion yuan versus a profit of 491.6 million yuan in 2016, though this was impacted by the fair value changes of convertible redeemable preference shares. The company has apparently invested heavily in the past year leading up to the IPO.

Beijing-based Xiaomi is the world's fourth biggest smartphone maker by shipment volume, according to International Data Corp. Operating profit tripled to 12.2 billion yuan, driven mainly by internet services with 60.2 per cent in gross margins.

After a challenging few years that saw a decline in smartphone sales, Xiaomi doubled down on offline retail with the opening of more than 200 Apple-esque retail stores across China while also branching into a wide product range of dirt-cheap internet-connected devices. Though it suffered through a challenging 2016, the company bounced back by revamping its sales model and expanding in India, where it rivals Samsung Electronics Co. as the biggest vendor. The numbers underscore how Xiaomi has remained resilient even as the global smartphone market has slowed, helped in part by a push overseas into markets like India.

In terms of markets, China is the company's biggest market and India is its most successful global operations.

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Meanwhile, Xiaomi's founder Lei Jun had said that he intends to distribute the profits from its hardware business amongst Xiaomi's users.

The exchange is eyeing several tech listings that are expected in the coming two years from Chinese firms with a combined market cap of $500 billion.

It has been the first applicant with dual-class shareholding structure since Hong Kong Exchange enacted revised bourse rules on April 30 which allows companies with dual-class shareholding structures and biotech firms with no revenue to apply for listing. The WVR give greater power to founding shareholders even with minority shareholding. Xiaomi could be the first company to IPO under the new rules.

CLSA, Morgan Stanley and Goldman Sachs Group Inc are sponsoring Xiaomi's IPO.