Xiaomi seeking up to $4 billion in equity deals

Platform News: Xiaomi

Chinese smartphone maker Xiaomi Corp is aiming to increase up to $4 billion in an equity and convertible bond agreement launched in Hong Kong on Tuesday, as reported by a term sheet seen by journalists.

The company is selling 1 billion shares in a top-up transaction priced involving HK$23.70 and HK$24.50, the term sheet revealed.

Xiaomi’s deal is the biggest ever top-up placement in Hong Kong, according to data from vendor Dealogic.

The scope is a 6.3% to 9.4% discount to Xiaomi’s closing price of HK$26.15 on Tuesday.

Xiaomi’s biggest shareholder, Smart Mobile Holdings, which owns about 27% of the business and is linked to chairman Lei Jun, according to the term sheet, is your selling Class B type shares.

A convertible bond agreement to increase $855 million can be penalized, as stated by the term sheet.

Last pricing of the share issuance will occur Tuesday after a international institutional bookbuild.

Xiaomi reported a 19% jump in third-quarter net profit on Nov. 24, as the Chinese smartphone manufacturer’s shipments over the quarter soared by some 45.3% from a year earlier.

The company said it had taken market share in China and Europe because its rival Huawei Technologies confronted US sanctions that have hit its distribution chain.

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Xiaomi’s stock has risen 147.5percent this year, which Aequitas Research analyst Zhen Zhou Toh said made the firm expensive compared to its major rivals. The positioning, he said, was not able to flooding the market with new inventory.

“Even though it is a large deal size by absolute amount the deal only represents 4.7 days of average daily volume which should be fairly easy for the market to absorb,” he wrote on the Smartkarma platform.

Before Xiaomi’s deal, the largest ever top up placement was completed by CNOOC Ltd when it increased $1.9 billion in 2006, the Dealogic data showed.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Scott Murdoch. Editing by Andrew Heavens and Louise Heavens.

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