Tech and Science News
Xiaomi puts indefinite delay on CDRs in blow to China's plans for tech listings
HONG KONG (Reuters) - Chinese smartphone maker Xiaomi Corp (IPO-XMGP.HK) said on Saturday there is no timeframe for a mainland share offering, casting doubt on Beijing’s efforts to lure foreign-listed Chinese tech giants back home.
Xiaomi had been expected to raise up to $10 billion, split between its Hong Kong and mainland offerings. But in a surprise move earlier this week, it postponed its mainland share offering until after it completes its scheduled July 7 listing in Hong Kong.
It did not say when it would restart its China depositary receipts (CDRs) issuance process or why it was postponing the mainland offering.
Sources told Reuters the decision was mainly because of a dispute between the company and Chinese regulators over the valuation of its CDRs, but the company denied this.
“We’ve had many rounds of discussions with the (Chinese) regulators and reached a consensus that to ensure the quality of our CDR issuance, it’s better that we go public in Hong Kong first,” Xiaomi’s chief financial officer, Shou Zi Chew, told a press conference in Hong Kong.
Xiaomi, which also makes internet-connected devices, has lined up $548 million from seven cornerstone investors including U.S. chipmaker Qualcomm Inc (QCOM.O) for its blockbuster Hong Kong IPO, Reuters reported on Thursday.
It is selling about 2.18 billion shares at a price range of HK$17 to HK$22 ($2.17 to $2.80) each, representing a multiple of 22.7–29.3 times 2019 earnings forecast by its underwriting syndicate.
The IPO values the Beijing-based, Cayman-domiciled company at $54.3 billion - $70.3 billion after a 15 percent “greenshoe” or over-allotment option which can be sold if there is demand. If the greenshoe is exercised, Xiaomi’s free float will be 9.99 percent of its enlarged share capital.
The new valuation range is far below the $100 billion touted by sources earlier this year and below the more recent $70 billion plus valuation target that some analysts and investors see as aggressive.
Reporting by Julie Zhu and Sijia Jiang in Hong Kong; Additional reporting by Fiona Lau of IFR; Editing by Anne Marie Roantree and Stephen Coates