By China Daily/ANN
Following Hong Kong Exchanges and Clearing’s proposal to accept listings by firms with dual-class share structures, China Business Network quoted an unidentified investment banker as saying Chinese mainland smartphone maker Xiaomi may be among the first batch of dual-class companies to have an initial public offering in the financial hub this year, eyeing a valuation of at least US$50 billion.
The source said Xiaomi management had met several investment banks in Hong Kong over the Christmas holidays, and the company is expected to pick its sponsor and underwriter soon. Xiaomi could not be reached for comment immediately.
Bloomberg early last month reported that Xiaomi was in talks with investment banks and was seeking a valuation of at least US$50 billion through an IPO. Mainland media later reported that the company had set the second half of this year as the target date for its IPO; the company expected its valuation to reach as much as US$200 billion.
Xiaomi has had six funding rounds to date, including the most recent investment of US$1.1 billion in 2014 at a US$46 billion valuation.
The Hong Kong stock market is currently very much sought-after by technology companies, partly because of the reform of its IPO listing rules.
The city’s exchange operator Hong Kong Exchanges and Clearing proposed two chapters of new existing listing rules in the middle of last month, aiming to draw more and more high-quality emerging and innovative companies to the city.
One proposal is to let technology companies with at least HK$10 billion in valuation list with multiple classes of shares, as well as to permit pre-profit biotech firms to launch, subject to additional disclosure and safeguards. Details of the rule changes will be put up for a formal public consultation in the first quarter this year.
Dual-class shares structures typically give one set of shareholders greater voting rights than others. The structure is favored by many technology companies, which seek extra voting power for top executives as protection against pressure for short-term returns.
After Hong Kong lost its spot as the world’s top IPO fund-raising venue last year, HKEx Chief Executive Charles Li Xiaojia said he believes these reforms will make Hong Kong an even more compelling global IPO center for new-economy companies seeking a listing venue.
“In fact, we’ve seen a marked increase in the number of listing enquiries we’ve received of late,” he writes in his blog.