Xiaomi May Aim for IPO in later 2018, Lei Jun Values Business at $200B

Xiaomi Chairman Lei Jun reportedly contacted an investment bank in November 2017 about a potential public listing of the company in the second half of 2018. Lei is said to have set a valuation goal of $200 billion. The company would not comment on the rumors.

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Xiaomi‘s public listing has been rumored for many years.

According to media reports, Xiaomi senior figures said Lei did engage with investment banks in November. Lei set a goal of $200 billion as Xiaomi‘s valuation, and this goal was recognised by investment banks, they said. Xiaomi staff said top executives talked with some of them and mentioned the listing in the second half of 2018. The specific month was not clear, and the valuation was similar to outside speculation.

This is not the first time Xiaomi has been rumored to pursue an IPO.

In January 2017, The information reported that an insider said Xiaomi was in talks with banks about an IPO in the second half of 2017. Hong Kong was the most likely listing venue, but New York was also an option. It was not clear whether Xiaomi would make an IPO or not. Some media cited industry sources saying that Xiaomi could be valued at $69 billion after such a listing.

Xiaomi denied the news at the time, saying the valuation remained what it was during the last round of financing. Without new financing the valuation will not change. “When Xiaomi performs well, its valuation is high. When the performance goes down, the valuation goes down. The most ridiculous thing is that now that Xiaomi is doing a good job its valuation is headed back up. They even gave a specific figure,” a spokesperson for the company said. It is worth noting that in December 2014, when Lei Jun announced that Xiaomi completed a new round of financing for $1.1 billion, Xiaomi was valued at $45 billion.

Lei repeatedly denied the IPO rumors. In March 2016, Lei said in an interview that there would not be an IPO during the next five years. “I said Xiaomi should make IPO, but Xiaomi wouldn’t go public just because of an IPO.”

Lei said Xiaomi had not sought a new round of financing since in 2014. At present, Xiaomi‘s cash account has more than 10 billion yuan – enough to do continue to improve. It is not under financial pressure.

At another event in 2016, Lei said Xiaomi would not go public until 2025. “When we started, we said we didn’t go public during the next five years. We ended up saying today that we don’t want to go public for the next five years. Today I’m going to expand on this. It will take 15 years for Xiaomi to go public. I knew this from the day I founded it,” Lei said.

In November 2017, Lei once again talked about the topic of listing at an event, saying that he has been doing business for a long time and doesn’t pursue short-term valuation. “I think we’re going to have an IPO when we’re comfortable.” He said Xiaomi‘s focus is still on innovation.

When Lei was asked about the IPO in December 2017 at Qualcomm’s 2017 Snapdragon Summit in Hawaii, he responded, “There’s nothing to tell.”

Behind the rumors is the resurgence of Xiaomi in 2017.

Xiaomi revived in 2017, after a lackluster performance in 2015 and 2016: this is a major reason for the IPO rumors. Lei personally heads up the supply chain and serves as the chairman of its quality committee. Xiaomi CEO Lin Bin launched Mi Home. After supplementing its delivery and offline channels, Xiaomi returned to the path of growth.

At the same time, Lei Jun made a new request to Xiaomi in an interview at the opening ceremony of Xiaomi‘s flagship store in Shenzhen in November 2017.

In early 2017, Lei set a target of 70 million shipments for Xiaomi and more than 100 billion yuan in revenue. “Some people say I brag, I don’t understand it.” Lei said Xiaomi achieved its goal of delivering 70 million units and 100 billion yuan in revenue in October 2017.

For 2018, Lei set a target of 100 million shipments. “I am 99 percent confident that we could ship 100 million handsets because it is not a very high goal, as I said in early 2017,” he said.

In addition to the target of shipments, he also proposed the goal of breaking into the Fortune 500 in 2018. “I am 99 percent confident that we can be in the Top 500. That sounds like an exaggeration, but it’s not that difficult for Xiaomi today,” he said.

In the 2017 Fortune Global 500, AutoNation, which ranked 500, had revenue of $21.69 billion, or about 143.4 billion yuan. That means Xiaomi‘s revenue target for 2018 could be around 140 to 150 billion yuan.

Before the flagship store opened in Shenzhen, Lei Jun summoned nearly all Xiaomi executives to a strategic seminar in Shenzhen. At the meeting, he asked whether the company would have a chance to achieve a turnover of 1 trillion yuan in 10 years. “We had an in-depth discussion with senior executives and concluded that Xiaomi has a 50 percent chance to reach $1 trillion revenue in next decade,” he said.