Published: Thu, May 03, 2018
Money | By Wilma Wheeler

Xiaomi files for IPO in Hong Kong

Xiaomi files for IPO in Hong Kong

The listing is expected to raise about USD 10 billion via the public offering, giving Beijing-based Xiaomi a market value of between USD 80 billion and USD 100 billion, people familiar with the plans told Reuters.

The company makes the lion's share of its profit - 60 percent - from internet services, including gaming and advertising linked to its homegrown user interface, MIUI, which had 190 million monthly active users as of March 2018. In India, the company went loggerheads with Samsung and has also emerged as the top-selling smartphone brand. The revenue of Xiaomi clocked 114.62 billion yuan ($18 billion) in 2017, up 67.5% from 2016. The company has posted a net loss of 43.9 billion yuan in 2017 while the revenue increased by 67.5 percent past year. According to a new IDC report, Xiaomi is the world's fourth-largest smartphone maker.

Xiaomi is taking advantage of a recent change in the Hong Kong stock exchange's rules that allows companies to issue more powerful voting shares to insiders and lesser shares to the public. People familiar with the matter told Bloomberg that the offering is expected to be worth at least Dollars 10 billion, making it the biggest since Alibaba's debut in 2014. At its height, it raised $1.1 billion in venture capital and became the world's most valuable startup. The exclusive tie-ups with online stores held Xiaomi back from reaching many less tech-savvy customers in China. The company has a strong presence in China, Europe and other APAC countries, but it aspires to prevail in the U.S market where it struggles.

The company is also facing greater competition in emerging markets like India and Indonesia, where competitors Huawei, Oppo and Vivo are expanding. He personally took charge of the supply chain and ramped up investments in dozens of businesses that made everything from fitness monitors, luggage, water purifiers, rice cookers and personal scooters.

The company bounced back through its retail strategy. It sold investors on a promise that it was not just a smartphone maker, but that it would use phones as a mechanism to sell services and ads to customers.

Xiaomi said its gross profit margin for smartphones was 8.8 percent a year ago, which is much lower than the estimated profit margin of around 60 percent that Apple has for its flagship iPhone devices.

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