Huge blow for Beijing’s plan to lure tech giants to list in China after Xiaomi pulls back
Smartphone maker’s cornerstone investors for Hong Kong IPO close to being finalised
Beijing’s pet plan to lure back the country’s best tech firms to list in China faced its first major setback as Xiaomi, the company hand-picked to test the project, postponed its plans to raise funds from the mainland.
“We will list in Hong Kong first, and later look for an opportunity to list the shares via Chinese depositary receipts (CDRs) in China,” the world’s fourth-largest smartphone maker said in the announcement dated June 18, without stating how long it plans to delay the listing of CDRs.
The CDR is a financial instrument introduced by Beijing in March to bring back overseas incorporated tech leaders.
Branded as a counterpart of the American depositary receipts, CDRs will enable mainland investors, who are barred from freely moving their money offshore, to directly trade receipts underlying the basic securities issued overseas by China’s tech firms.
Xiaomi was expected to be the first Chinese technology firm to float CDRs in early July, eyeing US$5 billion in proceeds closely followed by a similar amount from an initial public offering in Hong Kong.