Smartphone maker Xiaomi Corp., whose shares will debut in Hong Kong trading Monday, is one of the most-watched tech IPOs since the 2014 flotation of Alibaba Group Holding Ltd. Xiaomi raised $4.7 billion through the issuance of 2.2 billion shares, but the pricing was 23% lower than projected.
The shares touched a low of HK$16.50 in opening deals on Monday.
Xiaomi also made its debut amid an escalating trade war between the United States and China, which has sent the Hong Kong stock market, Hang Seng, to a nine-month low.
"At this critical moment in Sino-US trade relations, the global capital markets are in constant flux", he said.
The weak pricing values the firm, which also makes internet-connected home appliances and gadgets, at about US$54 billion, nearly half its original US$100 billion ambition earlier this year.
By contrast, China Literature Ltd, the e-book arm of Tencent Holdings, late a year ago raised $1.1 billion in its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed. The main Hong Kong stock market index ended 1.3 percent higher.
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The company had also expected to split its listing with another offering on mainland China, but cancelled that. In June, we said that Xiaomi was looking to raise about $5 billion (HK$39.22 billion) from shares, while it didn't meet its goal in the first day of trading, it is over half way there and maybe things will pick up for the unique firm.
Xiaomi's float was the first under the city's new rules allowing firms to weight voting rights in favor of company founders, as part of efforts to encourage more tech groups to choose Hong Kong over NY, its arch-rival.
"From day one, we've set up a dual-class share structure". However, its listing timing will depend somewhat on Xiaomi's stock performance, sources have told Reuters. Shares fell as low as HK$16 a share and were recently at HK$16.82.
Asked if the low pricing of some technology firms including Xiaomi will weigh on upcoming IPOs, Hong Kong stock exchange Chief Executive Charles Li said: "We can not put a brake".
Lei Jun (center), Xiaomi's CEO with senior vice president Li Wanqiang (left) and executive director Lin Bin (right) ahead of the company's IPO. The company is also making waves in Europe, where after less than two years in the market, it has become the fourth biggest smartphone seller.