Xiaomi seeks to raise $4bn in equity, convertible bond deal

By Rahul Vaimal, Associate Editor
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Chinese multinational electronics company Xiaomi Corp is targeting to raise up to $4 billion from an equity and convertible bond deal in Hong Kong, intending to expand its market share from competitor Huawei Technologies Co.

According to the term sheet, Xiaomi company is selling 1 billion shares in a top-up transaction to raise about $3.2 billion, with shares priced between $3.06 and $3.19, posting a 6.3 percent to 9.4 percent discount to its closing price of $3.37. The deal is Hong Kong’s biggest ever top-up placement in the record.

Xiaomi is also seeking to raise $855 million, through a seven years convertible bond deal, the term sheet shows. Final pricing of the share issuance will take place Tuesday following a global institutional bookbuild.

The biggest shareholder of the Chinese manufacturers, Smart Mobile Holdings Ltd, which owns about 27 percent of the company and is selling Class B type shares, according to the term sheet.

In the third-quarter Xiaomi’s net profit posted a 19 percent increase as the smartphone maker’s shipments surged by 45.3 percent year on year. The company had obtained a market share in China and Europe as its competitor Huawei Technologies faced US sanctions that affected its supply chain.

Xiaomi shares had been on a rally this year, rising 146 percent from a year ago making the company expensive when compared to its major competitors.

Before Xiaomi’s deal, the largest ever top-up placement was carried out by CNOOC Ltd when it raised $1.9 billion in 2006, the Dealogic data showed. Investment banks Credit Suisse Group, Goldman Sachs Group, JPMorgan Chase & Co. and Morgan Stanley are arranging Xiaomi’s offering.