Friday, July 10, 2020
Martin Hennecke

Xiaomi spares more for mainland
Xiaomi may open its retail book on June 25 and may only raise US$5 billion (HK$39 billion) in the city, less than market expectations as it spared more quota for mainland investors. The company may seek to raise about US$5 billion from the sale of Chinese depositary receipts and a similar amount from selling shares in Hong Kong, people familiar with the matter said. The split will depend on demand in the two markets and may change before the IPO, they said. The company is also targeting a valuation of about US$75 billion although that number could also shift, the people said. Xiaomi's IPO accelerates a push to attract more blockbuster listings through CDRs that enable a version of the shares to be traded on domestic exchanges. Selling more equity to local investors aligns Xiaomi with Beijing's policy goals and helps it command a higher valuation. Yesterday, JPMorgan, Morgan Stanley and CLSA - all of which are sponsoring or arranging the IPO - put Xiaomi's price tag at anywhere from US$65 billion to US$100 billion depending on the metrics used. "Giving mainland investors more access to Xiaomi's shares will definitely help it balloon its valuation," said James Yan, an analyst with consultancy Counterpoint. "Xiaomi's entire ecosystem is built in China: all of its partner companies from makers of drones to vacuum cleaners, see mainland China as their single most important market and so does Xiaomi." The eight-year-old company published its first prospectus for CDRs in Shanghai on Monday, disclosing share sale will be used to fuel expansion beyond China and bankroll the development of devices and media services. "In 2018, the company plans to enter or consolidate positions in Southeast Asian and European markets," Xiaomi said in its Chinese prospectus, which didn't mention a fundraising target. Meanwhile, Jiangxi Bank, a mainland commercial bank based in Jiangxi province, is opening its retail book today with a minimum investment of HK$3,363. It aims to raise as much as HK$7.16 billion, pricing its public float at between HK$5.94 and HK$6.66. One board lot is 500 shares. The bank is looking to expand its business in Guangzhou and Suzhou, said chairman Chen Xiaoming. The book building will be closed next Tuesday and the bank is to be listed on the main board on June 26.

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