After months of speculations and rumours, Xiaomi has finally filed for an IPO in Hong Kong. This marks a big win for the city of Hong Kong which has been trying to lure in tech companies to list in its stock exchange in recent times. In this regard, the city had made a few changes to its rules to allow for companies with multiple classes of shares to raise equity and this change seems to have paid off. It’s also an important milestone for Xiaomi as it opens its doors for public investors.

The IPO filings doesn’t mention the number of shares or the price per share but it is said that Xiaomi could be looking to raise at least $10 billion in its IPO. This should value the company at around $100 billion and it will likely be the biggest tech IPO of 2018.    In its filings, the company has revealed that 30% of the money raised would be used to develop its AI and IoT ecosystem, 30% would be used for R&D, and another 30% for global expansion. The remaining 10% would be used as working capital. Co-founders Lei Jun and Lin Bin will retain control of the company after the IPO through a special class of shares.

After a disappointing 2016, Xiaomi was quick to climb up the smartphone rankings ladder. In fact, yesterday’s Strategy Analytics report revealed that Xiaomi has climbed up to the fourth ranking in terms of global smartphone shipments, beating OPPO in Q1 2018. Sales in 2017 rose to 114.6 billion yuan, while the operating profit tripled to 12.2 billion yuan. The company posted a net loss of 43.9 billion yuan during this period but that was mainly because of pre-IPO preparations like issuing preferred shares to investors, making share based compensations and so on.

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Xiaomi’s IPO comes at a time when the global smartphone shipments are shrinking. Even the Chinese market has slowed down significantly. Despite this, the company has still managed to demonstrate great skill in steadily increasing its sales and revenue through changes in its offline strategy and global expansion. So, we know that the company can quickly adapt to the ever changing needs of the smartphone market.

Now that the company has filed for an IPO, expect a lot more details about its financials and operations in the coming months.

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According to recent data, Hong Kong raised $32.8 billion in equity capital in 2017, which is the lowest increase since 2008. But Hong Kong remains one the biggest equity capital-raising centers in the world, and now it is trying to recover. One of the plans is allowing dual-class shares just like New York exchange. Chinese tech companies like Xiaomi are attracted by the dual-class share structures and that is why they usually choose New York for their Initial Public Offerings (IPOs).

So Hong Kong will adopt dual-class shares, and it is expecting a $100 billion IPO for Xiaomi in 2018. According to bankers’ estimations, Xiaomi could be valued at up to $100 billion and this would make it the best valued Chinese tech company IPO. At the second place next year, there would be Lufax which is valued at $18.5 billion dollars: the difference is huge.

Tucker Highfield, the head of equity capital markets syndicate for the Asia Pacific at Credit Suisse, stated that over the next couple of years there is a good chance of $500+ billion market capitalization in the tech sector in China that could go public. Actually, regarding IPOs, Hong Kong ranks fourth globally, behind New York, Shanghai, and Mumbai’s National Stock Exchanges. Xiaomi, a single company, may contribute to change the situation in 2018. A 100 billion dollars IPO will grant Xiaomi the much-needed inflow of funds to expand further into newer markets.

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