China's smartphone maker Xiaomi raises $3.9 billion in an equity deal

Topics Xiaomi | China | Smartphone market

Xiaomi store

By Scott Murdoch

HONG KONG (Reuters) - Chinese smartphone maker Xiaomi Corp has raised $3.91 billion as part of a deal that includes Hong Kong's largest top-up placement, according to a term sheet seen by Reuters.

Potential investors have been told the price should be HK$23.70 for the 1 billion shares that are being sold down in the deal, the term sheet showed.

The price is at the lower end of the range flagged by the company on Tuesday when it said the deal would be between HK$23.70 and HK$24.50.

At HK$23.70, the placement would raise $3.06 billion.

A convertible bond deal to raise $855 million was also finalised Wednesday, according to the term sheet, to take Xiaomi's total raising to $3.91 billion.

Xiaomi's deal is the largest top-up placement in Hong Kong to date, surpassing one by CNOOC Ltd which raised $1.9 billion in 2006, the Dealogic data showed.

Xiaomi did not immediately respond to a request for comment.

The indicative price range is a 9.4% discount to Xiaomi's closing price of HK$26.15 on Tuesday.

Top shareholder Smart Mobile Holdings Ltd, which owns about 27% of the company and is connected to Chairman Lei Jun, according to the term sheet, is selling the Class B type shares.

Xiaomi reported a 19% jump in third-quarter net profit on Nov. 24, as the Chinese smartphone maker's shipments surged by 45.3% from a year earlier.

The company said it had taken market share in China and Europe as its rival Huawei Technologies faced U.S. sanctions that have hit its supply chain.

Xiaomi's stock has risen 147.5% this year, which Aequitas Research analyst Zhen Zhou Toh said made the company expensive compared to its major rivals. The placement, he said, was unlikely to flood the market with new stock.

"Even though it is a large deal size by absolute amount the deal only represents 4.7 days of average daily volume which should be fairly easy for the market to absorb," he wrote on the Smartkarma platform.

 

(Reporting by Scott Murdoch; Editing by Stephen Coates)


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel