Xiaomi raises $3.9 billion in capital deal

Chinese smartphone maker Xiaomi Corp has raised $3.91 billion in a deal that includes Hong Kong’s largest top-up, according to a conditions sheet seen by Reuters.

Prospective investors have been told that the price is expected to be HK $23.70 per billion shares that are sold as part of the deal, according to the list of conditions.

The price is in the lower end of the range the company reported on Tuesday when it announced the deal would be between HK $23.70 and HK $24.50.

At HK $23.70, the placement would raise $3.06 billion.

A convertible bond deal to raise $855 million was also finalized on Wednesday, according to the term sheet, to bring Xiaomi’s total raise to $3.91 billion.

Xiaomi’s deal is the largest top-up in Hong Kong to date, surpassing that of CNOOC Ltd which raised $1.9 billion in 2006, according to Dealogic data.

Xiaomi did not immediately respond to a request for comment.

The indicative price range is 9.4% off Xiaomi’s closing price of HK $26.15 on Tuesday.

The main shareholder Smart Mobile Holdings Ltd, which owns around 27% of the company and is linked to Chairman Lei Jun, according to the term sheet, sells Type B shares.

Xiaomi announced a 19% increase in third-quarter net profit on November 24, as the Chinese smartphone maker s shipments rose 45.3% from the previous year.

The company said it had taken market share in China and Europe as rival Huawei Technologies faced US sanctions that hit its supply chain.

Xiaomi stock rose 147.5% this year, which Aequitas Research analyst Zhen Zhou Toh said made the company expensive compared to its main competitors. The placement, he said, should not flood the market with new stocks.

Even though this is a large trade in absolute terms, the trade only represents 4.7 days of average daily volume, which should be fairly easy for the market to absorb, he wrote on the Smartkarma platform.