Xiaomi raises US$4 billion selling bonds and more shares, in Hong Kong’s biggest top-up fundraising to replenish its financial war chest
- Xiaomi prices share sale at HK$23.70 a share, representing a 9.4 per cent discount to Tuesday close, sources say
- Fundraising is biggest top-up placement in Hong Kong ever
The smartphone maker raised US$3.1 billion selling shares for HK$23.70 (US$3.06) each, the low end of an expected price range, according to people familiar with the matter, declining to be named for discussing matters that are not public. That price represented a 9.4 per cent discount to Xiaomi’s closing price of HK$26.15 on Tuesday.
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The equity placement was oversubscribed, with interest by regional investors, existing shareholders and multi-strategy funds, one of the people said.
The equity allocation was concentrated, with the top 10 investors receiving more than 60 per cent of the book, the person said. On the convertible bond allocation, the top 10 investors accounted for about 65 per cent of the deal, the person said.
Xiaomi shares fell 7 per cent to a 10-day low of HK$24.30 after a half-day trading suspension for its top-up financing announcement, the biggest one-day percentage drop in almost three weeks.
The company’s shares have been among some of the best performing in Hong Kong this year, more than doubling in value since the beginning of the year.
Bloomberg News reported the overnight fundraising earlier Wednesday.
Xiaomi’s top-up fundraising is the largest on record in Hong Kong, surpassing the US$2 billion sale in April 2006 by China’s largest offshore oil explorer CNOOC, and beating the US$1.74 billion sale of additional shares in May 2015 by China Taiping Insurance Holdings, according to Refinitiv’s data.
This year had been a high-water mark for top-up placements in Hong Kong, with the year-to-date reaching a five-year high of US$7.28 billion, more than six times the amount raised in the same period last year, Refinitiv said.
S&P Global Ratings said the transaction by Xiaomi was “opportunistic”, given the strength of equity markets and the company’s ample cash on hand. The company’s pro forma adjusted cash exceeded its gross debt by more than 20 billion yuan (US$3.05 billion) as of September 30, according to S&P analysts Hins Li and Clifford Kurz.
“This cash cushion will help the company weather any immediate business and industry volatility created by the pandemic,” the S&P analysts said in a client note on Wednesday.
Credit Suisse, Goldman Sachs, JPMorgan Chase and Morgan Stanley are underwriters on the offering.