Xiaomi confirms at least half of IPO to be sold in Shanghai

Xiaomi has said at least half of the stock in its planned initial public offering will be sold to mainland investors through Chinese depository receipts.

CDRs will account for at least 7% of the company’s share capital, the Beijing-based company said in a filing on Thursday.

The announcement confirms a Bloomberg News report on Monday. Xiaomi is planning to raise $10bn from its IPO with the shares to be split between Hong Kong and Shanghai, people familiar with the matter have said.

Xiaomi’s statement is the biggest vote of confidence yet in China’s push to bring more of its major technology companies to domestic exchanges.

Selling more equity to mainland Chinese investors aligns Xiaomi with Beijing’s policy goals and could help it command a higher valuation.

The company is targeting a valuation of about $75bn although that number could also shift, the sources said.

On Tuesday, analysts at JPMorgan, Morgan Stanley and CLSA - all of which are sponsoring or arranging the IPO - put Xiaomi’s price tag at anywhere from $65bn to $100bn, depending on the metrics used.

The eight-year-old company has said the share sale will be used to fuel expansion beyond China and bankroll the development of devices and media services.

Xiaomi survived a challenging 2016 to roar back to growth in 2017, bouncing back by revamping its sales model and expanding in India, where it rivals Samsung as the biggest vendor.

Led by billionaire co-founder Lei Jun, the company’s IPO could be the world’s largest first-time share sale since Alibaba listed in the US in 2014.