Could Xiaomi succeed on getting $10 Billion IPO

Chinese smartphone and connected device maker Xiaomi is bringing its blockbuster initial public offering to Hong Kong, where it could raise about $10 billion in the largest listing globally in almost four years, what is expected to be the world’s largest listing since 2014.

The IPO plans, filed on Thursday, will be one of the first in Hong Kong under new rules designed to attract tech listings, a major win for the bourse as competition heats up between Hong Kong, New York and the Chinese mainland. The listing could value the company around $100 billion and would be the world’s biggest IPO since Alibaba’s $25 billion debut in 2014. The IPO could be launched as early as the end of June, according to the people close to the process who requested anonymity as the details were not yet public.

The prospectus gave investors the first detailed look at Xiaomi’s financial health ahead of the IPO, showing resilience in a slowing global smartphone market thanks partly to a push into overseas markets like India. Revenue was 114.62 billion yuan ($18 billion) in 2017, up 67.5 percent against 2016, the company said. Operating profit was 12.22 billion yuan, up from 3.79 billion yuan year-on-year. Xiaomi made a net loss of 43.89 billion yuan versus a profit of 491.6 million yuan in 2016, though this was impacted by the fair value changes of convertible redeemable preference shares.

Xiaomi, in its deliberate move, is trying to pour huge investments and expand beyond borders. 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. Xiaomi has portrayed a consolidated image in the emerging markets and now it is looking forward to entering developed markets for smartphones. So far things are falling right on the bat for Xiaomi, last year it entered Spain and is also in talks with U.S carriers that’ll make it sell devices on Apple’s home ground. Not to forget, very recently, Pentagon banned the sale of ZTE and Huawei mobiles on U.S military bases.

The previous record of Xiaomi says, they have suffered through challenges like supply chain as one of the biggest operational challenges to handle, which has a direct impact on the sales. The mounting supply chain problem forced the company to retreat from many overseas markets, including Indonesia and Brazil. The exclusive tie-ups with online stores held Xiaomi back from reaching many less tech-savvy customers in China. However, it has shown a positive growth in India, the most promising market for Xiaomi, Xiaomi is a lot more than a smartphone company. It sells a variety of consumer electronics and IOT based gadgets. Sources said, Xiaomi is in talks with various manufactures for coming into segment of TV and e-wallet etc.