Chinese smartphone giant Xiaomi has filed documents for an IPO on the Hong Kong stock exchange that could see the company raise at least $10 billion in the biggest public offer since 2014.
The IPO is expected to value the company at between $80 billion and $100 billion, according to data and analysis company GlobalData. This would make it the largest IPO since Alibaba's $25 billion public listing in 2014.
GlobalData consumer technology analyst Avi Greengart said the listing would give Xiaomi the infusion of capital it will need to pursue an expansion to the West.
“Xiaomi has long planned to enter the US. For now it is targeting Europe, starting with Spain, and we will be closely monitoring how the brand and its business model translates well outside of China,” Greengart said.
“Xiaomi has said it plans to enter the US market ‘next year’ for the past three years. The US is famously unfriendly to Chinese brands right now. The bigger challenge is that carriers are the gatekeepers, the market is skewed heavily towards premium smartphones, and US consumers have expectations around brand and software that Xiaomi may have difficulty meeting.”
The vendor's “fascinating” business model involves selling phones in high volumes at low margins, and started with online-only operations, Greengart said.
“However competitors such as Huawei eventually countered with online-only brands of their own, and Xiaomi was unprepared. The company was able to successfully regroup and move into retail outlets as well as online. Xiaomi’s also thinks of itself as an incubator and IoT ecosystem vendor, investing in dozens of start-ups selling everything from air cleaners to fitness bands to Segways.”
Xiaomi's IPO documents [PDF] show that the company recorded a 67.5% increase in revenue in 2017 to 114.62 billion yuan (HK$141.36 billion). But the company swung to a net loss of 43.89 billion yuan from a profit of 491.6 billion yuan in 2016.
The company already has a presence outside of China, having rapidly grown to the top smartphone brand in India, IDC estimates. The research firm also puts Xiaomi at the number four spot globally in terms of smartphone market share, behind Samsung, Apple and Huawei.
First published in Computerworld Hong Kong