Xiaomi considers seeking $5 billion from sale of CDRs

Bloomberg

Xiaomi Corp. is considering raising about half of its proposed $10 billion initial public offering from mainland Chinese investors, people familiar with the matter said.
The company may seek about $5 billion from the sale of Chinese depositary receipts and a similar amount from selling shares in Hong Kong, the people said, asking to not be identified as the details are private. The split will depend on demand in the two markets and may still change before the IPO, they said.
The company is also targeting a valuation of about $75 billion although that number could also change, the people said.
Since Xiaomi started the IPO process, China has accelerated its push to bring more blockbuster listings to the mainland through CDRs that enable a version of the shares to be traded on domestic exchanges.
The eight-year-old company published its first prospectus for CDRs in Shanghai on Monday, disclosing a loss of more than $1 billion in the March quarter, as it begins gauging demand for the IPO. The share sale will be used to fuel expansion beyond China and bankroll the development of devices and media services.
The projected valuation on the company has fluctuated amid concern about its prospects with people with direct knowledge of its plans expecting anywhere from $60 billion to $100 billion for the Chinese smartphone maker. The company declined to comment beyond its filing.
Raising half the money through CDRs would represent a much larger proportion than expected. Reuters reported earlier this month that the company planned to sell about 30 percent of the stock to mainland investors.
In its CDR prospectus, Xiaomi said it plans to use about 40 percent of the proceeds to enlarge its global footprint. Xiaomi reported a $1.1 billion net loss on revenue of 34.4 billion yuan in the first quarter.