03 May 2018

Fast-tracked regulation puts Xiaomi on course for world's biggest IPO since 2014

The Stock Exchange of Hong Kong "aggressive"

Xiaomi's listing application seen as early vindication for Hong Kong's securities regulator and exchange operator aggressive reforms.

Major reforms in Hong Kong’s listing regulations has paid off for the Asian market, with plans of an IPO being announced by technology company Xiaomi. The listing is expected to raise about $10 billion via the public offering, giving Beijing-based Xiaomi a market value of between $80 billion and $100 billion, according to a Reuters report. This would make it the biggest Chinese tech IPO since Chinese internet giant Alibaba Group raised $21.8 billion in 2014.

Aggressive regulation
Exchange officials of Shanghai and Shenzhen had been particularly aggressive in wooing Xiaomi and other Chinese technology companies to raise capital onshore, promising fast-tracked approvals, easier regulations and additional incentives. To compete with regional bourses, Hong Kong's HKEX pushed through rules to let pre-revenue biotechnology firms and technology firms with multiple classes of stocks sell equity. The new rules, which were controversial from the outset, appear to have paid off. Xiaomi was founded in 2010 by a group of engineers and designers led by ceo Lei Jun.

IPO sooner than planned
In March 2015, the head of the company’s top lawyer Zhang Liang told Legal Week there were no plans for a listing within the next five years. In the interview, he also said most legal work was done in-house He explained “We don’t have a budget for legal spend,” explaining local firms were preferred over international firms which he said were more expensive and used local firms themselves in remote geographies. He said,“for big M&A projects…mainly we will choose Jun He and another less well-known firm. They have a relationship with our boss [Lei Jun].” Wang Xiang, an engineer who joined Xiaomi in 2015, is listed on the company website as leader of the global business, intellectual property rights and legal affair teams.