Xiaomi says it doesn’t have timeframe to revisit China listing

Xiaomi Corp. CFO Chew Shou Zi. (Bloomberg pic)

HONG KONG: Xiaomi Corp. said it hasn’t set a timeframe to revive an offering of Chinese depository shares, a delay that could hurt China’s ambitions to lure its tech giants to list in the domestic market.

The Chinese phone maker had no dispute with China Securities Regulatory Commission on the proposed listing, Chief Financial Officer Chew Shou Zi said at a briefing on Saturday, two days before the company starts a retail stock offering for its Hong Kong share sale. The initial public offering is set to be the world’s biggest in nearly two years.

Xiaomi decided this week to postpone a listing in Shanghai. The abrupt withdrawal from the plan to tap mainland investors reduced its overall fundraising goal, and dealt a setback to China’s plan to compete with Hong Kong and New York for the world’s biggest IPOs.
“We have decided to first list in Hong Kong and later list CDR at a right time in order to ensure the success of the CDR scheme,” Chew said. Xiaomi was earlier planning to seek about $10 billion combined from the Hong Kong IPO and CDRs.

The company and its IPO arrangers are marketing the Hong Kong offering at 22.7 times to 29.3 times Xiaomi’s forecast 2019 earnings, people with knowledge of the matter have said. At the top end, it would be more than twice as expensive as Apple Inc. and a little pricier than the 28 times estimated earnings of Tencent Holdings Ltd., China’s biggest Internet company.

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Chew said Xiaomi deserves a premium in valuation because it has businesses in hardware, Internet and e-commerce.
Xiaomi has drawn China Mobile Ltd., the nation’s biggest wireless carrier, and U.S. chip giant Qualcomm Inc. to participate as cornerstone investors in its Hong Kong IPO that could raise as much as $6.1 billion, according to terms for the deal obtained by Bloomberg. That would make it the world’s biggest first-time share sale since Postal Savings Bank of China Co. raised $7.6 billion in a Hong Kong share sale in September 2016.

Individuals can start putting in orders for Xiaomi shares from June 25 through June 28, according to a statement, joining the institutional investors who have been doing so since Thursday. The company expects to begin trading July 9, it said. Goldman Sachs Group Inc., Morgan Stanley and CLSA Ltd. are joint sponsors for the IPO.