Xiaomi eyes IPO early next year
Mainland industry giant may launch offering early next year after securing US$1 billion loan
Xiaomi, the world's third-largest smartphone supplier after Apple and Samsung, is aiming for an initial public offering as early as next year, said two people close to the company.
A spokesman for Xiaomi did not respond to requests for comment.
The potential share offering comes after the Beijing-based technology start-up said it would spend US$1 billion to expand its own television content. It has hired Chen Tong, a former executive at Sina, to revamp its internet television business.
The company also last month closed a US$1 billion loan deal with a syndicate of 29 banks.
"Xiaomi is one of the large Chinese technology companies that would tap the IPO market next year," said one of the sources. "Hong Kong investors seem to be more receptive of hardware than software firms, making the city the likely IPO destination for Xiaomi."
Sources said the four-year-old company, which is valued at US$50 billion, had yet to decide when and where to launch the initial public offering but the current market appetite for technology firms with a clear growth outlook, like Alibaba Group Holding, would be an incentive to do it soon.
"Xiaomi's flotation plan is not a surprise after its US$1 billion syndicated loan deal," said Jean-Louis Lafayeedney, an analyst at Societe Generale Ji Asia. "It would be logical to launch the Xiaomi deal next year. Alibaba took about a year to go public after securing a US$8 billion loan."
Xiaomi plans to sell at least 60 million smartphones this year and is forecast to hit a sales target of 100 million next year. It sold 26 million phones in the first six months of this year.
"Profitability at Xiaomi's smartphone business should be fairly slim as most of its products are selling at break-even price," said Lafayeedney.
The average Xiaomi handset is priced about US$150, compared with the iPhone 6's price tag of more than US$600.
But some analysts say Xiaomi's customised Android operating system and its accessories unit offer higher returns than its phone manufacturing business.
