Hong Kong seen winning mega-IPO from Xiaomi after reforming listing rules
Chinese smartphone maker Xiaomi is reportedly valued at as much as US$110 billion as it aims for an initial share sale in Hong Kong. The company was reportedly considering New York for its IPO.
Hong Kong may have won its first battle to attract more technology listings by revamping its IPO rules, with Chinese smartphone giant Xiaomi seen choosing the city over New York.
Xiaomi’s listing could be as much as US$16.5 billion, making it the biggest IPO in Hong Kong since AIA Group’s US$20.4 billion listing in May 2010.
Alibaba Group, which chose New York over Hong Kong for its US$25 billion share listing in 2014, still holds the record for world’s biggest technology IPO.
The Beijing-based company has appointed Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley to work on its share sale on the Hong Kong stock exchange, according to a person with direct knowledge of the matter, who asked not to be named because the discussions are private.
Xiaomi would like to be the first company to list under the new IPO rules allowing for a two-tiered share structure with different voting rights, said the person. The plan is for the listing to take place in September, after the reforms have been enacted, the person said.
Winning over Xiaomi would be a significant win for Hong Kong and may pave the way for more technology companies to follow, burnishing the city’s reputation not just as a financial centre but also as a technology hub. Besides Tencent Holdings, the social media-to-gaming giant, the Hong Kong stock market is dominated by banks and industrial companies that are seen as representing the older parts of China’s economy. The city has lost out on many high-profile Chinese tech companies to the US, from Alibaba to search-engine operator Baidu, with the IPO rules governing track record and voting classes often cited as reasons.
“Not only Chinese tech companies but also overseas ones would seek to list in Hong Kong, given it’s a market with free flow of capital and the recent gesture by the Hong Kong exchange to making listings easier for them,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “That will help to cement its position as a global financial centre.”
Hong Kong’s stock market is now the third biggest in Asia with a market cap of US$5.9 trillion, according to data compiled by Bloomberg. The markets in mainland China and Japan are bigger at US$8.3 trillion and US$6.8 trillion, respectively.
Financial stocks including HSBC Holdings, Industrial & Commercial Bank of China and China Construction Bank make up half of the weighting of the 51-member Hang Seng Index. Oil and gas giants PetroChina and Sinopec are two other companies on the measure.