Cheers and Fears of China's Tech Listing Boom

Doris Richards
July 9, 2018

Smartphone maker Xiaomi Corp., whose shares will debut in Hong Kong trading Monday, is one of the most-watched tech IPOs since the 2014 flotation of Alibaba Group Holding Ltd. Xiaomi raised $4.7 billion through the issuance of 2.2 billion shares, but the pricing was 23% lower than projected.

Still, the eight-year-old company, which has ambitions to transform itself from a low-priced maker of phones to a global rival to match Apple, managed to raise $4.72bn, making it the world's biggest technology float in four years.

Shares in Xiaomi, the Chinese mobile phone maker, slid nearly 6% at the start of trading in Hong Kong.

"At this critical moment in Sino-US trade relations, the global capital markets are continuously changing", he added.

Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

The stock that was made available to retail investors drew orders represented 9.5 times the shares offered, the company said Friday.

By contrast, China Literature Ltd, the e-book arm of Chinese gaming and social media firm Tencent Holdings, late past year raised US$1.1 billion for its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed. That is far short of the oversubscription rates for other tech IPOs in Hong Kong. It is also the first under the city's new exchange rules permitting dual-class shares, common in the United States tech industry in an attempt to attract tech floats.

"We are an internet firm".

Its shares fell Monday even though the broader Hong Kong market was up about 1.5%. These include a $4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to $10 billion IPO from China Tower, the world's largest mobile tower operator. However, its listing timing will depend somewhat on Xiaomi's stock performance, sources have told Reuters.

Beijing-based Xiaomi is the first firm in Hong Kong to trade with a controversial dual-class structure since listing rules were overhauled to allow weighted voting rights for different sets of shareholders. The market is always open.

Chinese e-commerce site Alibaba raised $25bn in NY in 2014.

It is now the biggest smartphone vendor in India and is pushing into European markets including Spain and Russian Federation, though it has lost share in China recently to lower-cost rivals.

Other reports by Iphone Fresh

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