Xiaomi, a Chinese Startup, Picks Hong Kong for a Major IPO

Posted May 2, 2018 11:00 p.m. EDT

HONG KONG — Xiaomi, the Chinese gadget-maker that has become one of the world’s largest smartphone companies, has picked Hong Kong to list its shares in what is widely expected to be a major initial public offering.

The choice is a victory for the Chinese city, which missed out on blockbuster stock offerings by Alibaba and other rising internet companies in mainland China in recent years. Just days ago, officials at Hong Kong’s stock exchange had loosened its rules to land some big tech stock offerings.

In a filing on Thursday with Hong Kong’s stock exchange, Xiaomi said it planned to raise an unspecified amount of money through a public sale of shares. It said it would use the money to develop new smartphones, smart TVs, home speakers and other household gadgets, as well as to finance its ambitions to expand beyond the Chinese market.

The filing indicates that Xiaomi will take advantage of Hong Kong rules that now allow companies to issue supervoting shares to top insiders as well as shares with lesser voting rights to the public. Xiaomi said Lei Jun, its founder, chairman and chief executive, would retain control of the company after the offering because of that arrangement.

Xiaomi began as a maker of cheap smartphones that were sometimes criticized for aping Apple’s iPhone. It nurtured a strong following through viral marketing techniques and a community of users it nurtured in China who would suggest tweaks and fixes to the operating system that runs the phones.

The company stumbled two years ago as other Chinese companies, like Huawei Technologies and Oppo, began turning out phones at competitive prices. Since then, Xiaomi has refurbished its lineup and begun an expansion into India and other new markets. The company is now the world’s fourth-largest smartphone maker, according to the International Data Corp., behind Samsung Electronics, Apple and Huawei.