Something’s wrong with Xiaomi Corp.’s much-awaited dual listing?
The Chinese smartphone maker said on Tuesday it will postpone its application for a mainland share offering through the issuance of China depositary receipts (CDRs) until after it completes an initial public offering in Hong Kong next month.
This could be a blow to Xiaomi, which has planned to raise US$10 billion in fresh capital this summer from the mainland and Hong Kong offerings. Its mega IPO is also to be Hong Kong’s first dual-class share listing.
Xiaomi’s move also creates uncertainties for Beijing’s initiative to lure tech giants like Baidu, Alibaba and Tencent back home. The China Securities Regulatory Commission said it respects Xiaomi’s decision, and would suspend the review of its CDR application.
It was not immediately clear if the postponement had anything to do with the aggressive pricing of its share offering. Xiaomi has been valued at up to 34 times forecasts for its 2019 adjusted earnings, or twice as much as that of Apple Inc., with which it is being compared.
According to mainland reports, none of Xiaomi’s cornerstone investors are from outside China. Half of the eight new investors are asset managers of the four state-owned banks.
How Xiaomi will be perceived by Hong Kong retail investors remains a big question mark. But one might get an indication from the way investors are responding to local brokerages’ promo to sell the IPO.
Several brokerages are giving away Xiaomi Mi Bands, the company’s answer to Fitbit, to entice investors to subscribe to the shares.
It’s not a bad idea, considering that there is no shortage of Mi fans in Hong Kong, who are also always on the lookout for freebies and bargains, especially cut-price electronic devices and home appliances.
The problem is that the giveaway wearable activity tracker is a Mi Band 2, priced at around HK$200. Most of those wanting to have the device prefer the latest model, the Mi Band 3, but of course. The new model, because of the huge demand, is selling at around HK$300 in Hong Kong.
A two-year-old smart device for a new IPO just doesn’t impress potential investors, I suppose.
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