Xiaomi Might Have a $10 Billion IPO That Is Just Around the Corner
Xiaomi can go public any time now. Earlier this month it was reported that the company will file for an initial public offering in Hong Kong next month, seeking a valuation of $70 billion. As per the latest reports, the Chinese smartphone maker will go public with a $10 billion IPO.
Xiaomi Might Discourage a Portion of Investors Because it Is Keeping Its Net Profit Locked at Just 5 Percent
If the report is to be believed, this IPO would be the largest one seen so far this year. The company will be listed on the Hong Kong Stock Exchange, with Xiaomi reportedly hiring numerous finance firms to attract a lot of investors. However, this is not going to be easy, given the fact that company recently decided to cap net profit at 5 percent. This ‘low margin’ business model has allowed Xiaomi to obtain a massive market share in various countries, but some investors believe that it might limit the earning power of the rising Chinese tech giant.
Xiaomi has ambitious plans for the future and hopes to expand its services and software categories as well. These benefit from the hardware sales so, in essence, the company isn’t losing anything by keeping lower profit margins as it realizes benefits elsewhere. Xiaomi is amongst the top five smartphone makers in the world, so naturally high expectations are attached to the company as it gears up to go public.
It is expected that Xiaomi will officially file for an IPO by the end of this week. However, the company will not go public before the start of June. Once everything is completed, it will be interesting to see where the extra capital would be directed by the company.
The tech firm also plans to enter the U.S. market by the end of 2018 and establishing itself in the country is going to be one of its main objectives. Side by side, research and development will also take precedence and the company is aiming to sell 100 million units this year.
Do you think Xiaomi will experience trouble attracting fresh investors to the table? Tell us down in the comments.
News Source: Bloomberg