Xiaomi's lofty IPO plans take a massive haircut, to raise $6.1 Bn at $53 Bn valuation

Last month, when Xiaomi filed for an initial public offering in Hong Kong, it expected to raise around $10 billion that would increase its value to a high of $100 billion.

In a month’s time, however, the scenario has completely changed. It is now aiming to raise only $6.1 billion and the valuation may now plummet to $53.9 billion, which is roughly half of its initial goal.

The smartphone firm is offering 2.18 billion shares at the price of HK$17 to HK$22 per share. Amidst this, it is also reaching out to the US-based Qualcomm and China Mobile Ltd, who might become the cornerstone investors.

In the aforementioned price range, Xiaomi’s value stands between $53.9 billion and $69.8 billion and can rise to approximately $70.3 billion if the ‘over-allotment’ option is exercised.

The current valuation of Xiaomi is nowhere near the figures which the company's executives had expected when they decided to launch an offering. Xiaomi last raised money in 2014 at a $46 billion valuation.

Recently, the company reported a loss of $1 billion in the first three months of 2018. It also clocked a revenue of $5.37 billion during the quarter.

The Beijing-based company has seen rising sales of lucrative smart-home devices and internet services. Roughly 31.8 percent of Xiaomi’s revenue in 2018’s first three months came from products such as air purifiers and scooters and online services such as mobile apps.

Experts believe that the company’s quick growth outside China, especially in a market like India, has helped the company to expand.

After China, India has become the next largest market for Xiaomi. In less than three years of its launch in India, it turned profitable in the country in the fiscal ended March 2017.

Xiaomi registered the maximum growth during FY17 with sales surging 696 per cent to Rs 8,379.3 crore. It made a profit of Rs 163.9 crore. A year ago, it had revenues of Rs 1,046.2 crore with net loss of Rs 46.9 crore.

It had also set a target of hitting $2 billion revenue mark in 2017, twice the amount from 2016.

The development was first reported by Bloomberg.