Chinese smartphone giant Xiaomi has filed for an expected $10-billion (R126-billion) listing on the Hong Kong stock exchange in what would be the world's biggest flotation since 2014.
The phone maker, founded in 2010, would be the biggest float since Chinese online retail behemoth Alibaba listed in 2014, potentially valuing the Beijing-based company at $100-billion.
Xiaomi has grown into a powerhouse of phone sales as the world's fourth-largest smartphone company. It is one of the top players in China's smartphone market, recording sales that far outstrip US rivals such as Apple.
Its models have proved a hit, with mid-range prices that undercut profitable premium phones from Samsung and Apple.
The listing is expected to raise $10-billion, while its filing has revealed the young company's financial results for the first time. Xiaomi recorded profit of $1.9-billion, with $18-billion of revenue last year. The float is expected in the second half of this year.
The company saw its sales slow in 2016, but in 2017 these rebounded by almost 70%.
"As far as we know, apart from Xiaomi, there has never been another smartphone company that has successfully rebounded after a decline in sales," said founder and chairman Lei Jun.
The float would make Lei one of China's richest businessmen. He already has a net worth of $12.5-billion, but the float could add to that.
Lei, 48, has been compared to Steve Jobs, although he has said that while he would have been "honoured" by the comparison as a 20-year-old, now he "[doesn't] want to be considered second to anyone".
The company has said it would ensure value by setting a profit cap of 5%, a highly unusual move. In its listing documents, Lei said if its net margin exceeded 5%, it would return the excess to its users.
While popular in China, Xiaomi has grown into the top smartphone brand in India. It has also begun to market its phones in Europe through stores in Spain, and its filing said it planned to target Europe for future growth. Xiaomi reported a surge in revenue last year, although it has lost ground in the Chinese smartphone market to local rivals.
"For Xiaomi, the timing is right," said Sammy Li, a Hong Kong-based partner at Hogan Lovells.
"Hi-tech companies tended to go to Nasdaq because it was a more mature market and there was a bit more flexibility in rules over voting rights. Until recently, Hong Kong did not allow these more unusual structures."
Souring US relations with China may cause more Chinese tech companies to look for funding in their domestic market. Smartphone company ZTE was blocked from selling its phones in the US, while Huawei's plans for a deal with US networks failed.
"The ZTE saga will not have helped in terms of sentiment," Li said, "although Xiaomi will have been planning their move long before this."
The listing would be a boon for the Hong Kong stock exchange, which has relaxed its rules to make it easier for companies to list.
While the Asian rival to the New York stock exchange had a slow 2017, investors and bankers hope the market could see up to $500-billion of technology floats, as Chinese tech firms mature and choose their local market for a listing.
- The Daily Telegraph, London..