Published: Wed, July 11, 2018
Industry | By Dora Warner

Xiaomi IPO: Shares slip in trading debut

Xiaomi IPO: Shares slip in trading debut

Xiaomi's IPO began on Monday in Hong Kong to a fairly slow start, with trade slipping more than 2%, sometimes dropping by 5.88%.

Lei Jun (center), Xiaomi's CEO with senior vice president Li Wanqiang (left) and executive director Lin Bin (right) ahead of the company's IPO.

"Trading below the issue price suggested that investors still felt the valuation of the stocks was relatively high compared with Tencent and Apple", Linus Yip, chief strategist at First Shanghai Securities, told Reuters.

The Chinese smartphone giant-and the world's fifth biggest smartphone maker-went public on the Hong Kong Stock Exchange on Monday, reports CNBC.

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Speaking at the ceremonial opening of trading, Xiaomi's chairman Jun Lei acknowledged that the timing of the IPO might not be optimal given the state of trade friction between the USA and China.

Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

"The market environment is getting conservative. Xiaomi's self-positioning as an internet company also needs some convincing", he added. Even though much of the company's revenue comes from smartphones sales, Xiaomi has pinned its hope on internet services to account for most of the profit in the future.

"From day one, we've set up a dual-class share structure".

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"We believe online technology platforms, especially those focusing on health care like us, which could tap the pinpoints of China's 1.4 billion population, will be acknowledged and rewarded by the market", he said, without revealing a specific time frame for the listing.

Xiaomi sold 2.18 billion shares in its IPO, 1.4 billion of which were new shares. Goldman Sachs Group Inc., Morgan Stanley and CLSA Ltd. are leading Xiaomi's IPO as joint sponsors.

Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.

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