Xiaomi Lowers Valuation After Delaying Mainland Share Offering

Xiaomi the smartphone maker based in China has lowered its valuation following the decision it took to delay a mainland share offering until following its IPO in Hong Kong. The new valuation Xiaomi gave itself was $55 billion to $70 billion.

The delay came about because of a dispute between regulators and the company related to the valuation of Xiaomi’s China depositary receipts or CDRs, said source, which casted doubt on the efforts of Beijing to lure Chinese tech giants that are foreign-listed back home.

Xiaomi Corp will use the range of $55 billion to $70 billion when talking with its possible cornerstone investors prior to its planned launch of an initial public offering in Hong Kong late this week, said sources.

The updated valuation is much less than the $100 billion being touted earlier in the year but inside sources and below a more recent price for a floor of $70 billion the company, as well as advisers had used informally as a guide for investors.

Research preformed prior to the IPO from its different sponsoring banks had valued Xiaomi from $65 billion to $86 billion,

The company announced that it was asking regulators to delay its applications for selling CDRs, but did not give any reason for taking that decision.

In a post made on its Weibo account, Xiaomi said that after careful research, the company decided to implement Hong Kong and its IPO for the mainland in a very measured way; listing Hong Kong first prior to going public on the mainland via the CDR.

Xiaomi, which is based in Beijing but domiciled in Cayman, was expected to raise as much as $10 billion, with its offerings in Hong Kong and the mainland, in what would be one of the largest tech floats of recent anywhere in the world.

Sources said Xiaomi wants to sell just 10% of its new enlarged capital in the offering in Hong Kong.

It delay of the CDRs is a big blow for officials in China who designed those offerings as a way for China to compete on a worldwide stage for major tech listings as well as give investors on the mainland access to tech champions.

Others are known to be contemplating CDRs including Baidu, Alibaba and JD.com.