Xiaomi eyeing US$5.3b share sale as stock surges

Bloomberg and staff reporter

Xiaomi (1810) is planning a share sale that may fetch as much as US$5.3 billion (HK$41.34 billion), capitalizing on a surge in the company's stock price to help raise funds to expand its electric vehicle business after BYD's (1211) fundraising.

The Beijing-based company is offering 750 million shares at HK$52.80 to HK$54.60 apiece, according to terms of the deal seen by Bloomberg. That's a discount of 4.2 percent to 7.4 percent versus the stock's last close of HK$57 in Hong Kong.

Xiaomi is investing aggressively in its nascent EV business to drive growth. It recently increased its 2025 EV delivery target after posting the fastest revenue growth since 2021.

As part of its efforts to ramp up production, the Beijing-based company is expanding the size of a planned second electric car factory in the Chinese capital, according to earlier reports.

Billionaire co-founder Lei Jun said in 2021 that the company plans to invest US$10 billion over the next decade into electric cars.

Xiaomi has more than tripled from a low in August, making it one of China's most expensive tech stocks. The company has won investors over by duplicating its smartphone success in China's crowded EV market.

Xiaomi plans to use the proceeds from the share sale to accelerate its business expansion and invest in research and development to advance technological capabilities, the terms show.

It comes as leading EV makers like BYD and Geely Automobile (0175) have announced new artificial intelligence-driven strategies to get ahead of their rivals amid a bitter price war, which requires more funds. Notably, some carmakers like Nio (9866) are still struggling to turn profitable.

Earlier this month, BYD raised US$5.6 billion in Hong Kong's biggest share sale in nearly four years, fueling expectations of a rebound in equity capital markets activity in the Asian financial hub. The news of BYD's share placement once rattled the share prices of mainland EV makers, as analysts warned of a potential wave of share sales.

For Xiaomi's share sale, KGI Asia analyst Tommy Kung Chun-wah said the scale is not large and the discounts are relatively small. Kung sees a limited impact on the company's share prices.

Everbright Securities International securities strategist Kenny Ng Lai-yin also projects Xiaomi's shares would fluctuate in the short term but he sees a low possibility that the stocks would dip below the offer prices.

Goldman Sachs and China International Capital Corp (3908) are among banks on the Xiaomi's deal.