Xiaomi, on cusp of world’s biggest IPO since 2014, sets sights on global markets
Xiaomi CEO Lei Jun has steered his company to possibly the world’s biggest IPO since 2014. Now he has declared his ambitions to take the smartphone maker global.
“What Xiaomi wants to build is definitely not a closed business empire,” Lei said in the letter posted on his official WeChat social media account. “Xiaomi is also not just an innovative technology company, more an advocate and creator of a digital age lifestyle. There needs to be not one Xiaomi but 100 Xiaomis, maybe even more, to build a rich and prosperous new business ecosystem.”
The company, the world’s fourth-largest smartphone maker ranked by shipment, has submitted an IPO application to the Hong Kong Exchanges & Clearing Limited under new listing regulations for technology start-ups.
While the application omitted financial terms, bankers familiar with the plan said the Beijing-based company is seeking to raise US$10 billion, in a sale that values the eight-year-old company at US$100 billion.
That would catapult Xiaomi, founded in 2010 by serial entrepreneur Lei, past Baidu and JD.com to become the third-biggest Chinese technology company by value, after Tencent Holdings and Alibaba Group Holding. At US$10 billion, Xiaomi’s IPO would also be the 15th biggest of all time, or the fourth-largest in Hong Kong.
Xiaomi has entered more than 70 markets globally in the smartphone business, and achieved first place in India and in the top few placings in 15 other markets, Lei said in his letter. “Xiaomi is and will continue to prove that the Xiaomi model is quickly replicable globally,” he said.
On Thursday, Xiaomi announced a partnership with Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings, where CK Hutchison will sell the Mi brand smartphones and smart devices across its network of 17,700 retail stores in 50 countries. CK Hutchison operates AS Watsons’ Fortress stores and 3 Group’s telecommunications stores.
The so-called Xiaomi model is built on the idea that profit can be made from services delivered to a customer base of connected devices. That allows Xiaomi to make less from its hardware products, which in turn helps to build a reputation for value-for-money.
The Beijing-based company passed a resolution last month to limit the margin it makes on hardware products to 5 per cent, and to distribute any excessive amount to its users.