Citing an insider, Bloomberg reported that Xiaomi is discussing its potential IPO with an investment bank and expecting a US $50 billion valuation.
The inside source said Xiaomi is considering an IPO as early as next year, and that the investment bank had advised it to list in Hong Kong.
Several investment banks are hoping to become underwriters for Xiaomi’s IPO, but they are also worried about whether Xiaomi could be valued at US $50 billion. Xiaomi’s last round of financing was in 2014, when it was valued at US $46 billion.
Xiaomi has started to recover in recent months after a strong challenge from local smartphone makers such as Huawei and Oppo. It is expanding its market in India and is expected to overtake Samsung in the Indian market.
A successful IPO will bring at least US $5 billion of “ammunition” to support Xiaomi, according to the insider. Xiaomi is in desperate need of the funds for its continued expansion.
“We will transplant our business philosophy in China to other countries. In India, we have achieved a miracle, ranking first after only three years of effort,” Xiaomi CEO Lei Jun said at the World Internet Conference in Wuzhen.
A Xiaomi spokesman said the company has no comment on its reported IPO plan.
Indeed, The Information, a tech media based in Silicon Valley, reported earlier this month that Xiaomi would come to the market as early as the second half of 2018.
As for the IPO valuation of US $50 billion, analysts say Xiaomi could reach such a valuation depending on its business performance and market trends over the coming months.
In addition to giving the company enough money, the IPO will help retain talent. Earlier this year, Hugo Barra, former Xiaomi vice president, left his job and returned to Silicon Valley to join Facebook.
“Xiaomi employees also want to hear the company’s final IPO plan,” said James Yan, an analyst at Counterpoint, a consultancy.
Xiaomi is pushing ahead with international expansion, particularly in India. Lei said in March that Xiaomi would double its investment in the Indian market to US $500 million over the next three to five years.
“We have seen the rise of Chinese brands,” Lei said, “In the next 10 years, more Chinese brands will grow and become international. The trend is clear.”