Chinese smartphone giant Xiaomi has filed for an anticipated US$10 billion ($14.2b) listing on the Hong Kong stock exchange in what would be the world's biggest flotation since 2014.
The phone maker, founded in 2010, would be the biggest float since Chinese online retail behemoth Alibaba listed in 2014, potentially valuing the Beijing-based company at US$100b.
A relative unknown in some smartphone markets, Xiaomi has grown into a powerhouse of phone sales as the world's fourth largest smartphone company. It is one of the top players in China's smartphone market, recording strong sales that far outstrip US rivals like Apple.
Its models have proved a hit, with mid-range prices that undercut profitable premium phones from Samsung and Apple.
The listing is anticipated to raise US$10b, while its filing has revealed the young company's financial results for the first time. Xiaomi recorded profits of US$1.9b, with US$18b of revenue last year. The float is expected in the second half of this year.
The company saw its sales slow in 2016, but in 2017 they rebounded by almost 70 per cent.
"As far as we know, apart from Xiaomi, there has never been another smartphone company that has successfully rebounded after a decline in sales," said founder and chairman Lei Jun.
The float would make Lei, the company's founder, one of China's richest businessmen. Lei already has a net worth of US$12.5b, but the float could add to that.
Lei, 48, has been compared to Steve Jobs, although he has previously said that while he would have been "honoured" by the comparison as a 20-year-old, now he "[doesn't] want to be considered second to anyone".
The company has also said it will ensure value by setting a profits cap of 5 per cent - a highly unusual move. In its listing documents, Lei said if its net margin exceeds 5 per cent, it will return the excess to its users.
While popular in China, Xiaomi has also grown into the top smartphone brand in India. It has also begun to market its phones in Europe through stores in Spain, and its filing said it plans to target Europe for future growth. Xiaomi reported a surge in revenues last year, although it has lost ground in the Chinese smartphone market to other local rivals.
"For Xiaomi, the timing is right," said Sammy Li, a Hong Kong-based partner at Hogan Lovells. "Hi-tech companies tended to go to Nasdaq because it was a more mature market and there was a bit more flexibility in rules over voting rights. Until recently Hong Kong did not allow these more unusual structures."
Meanwhile, souring US relations with China may cause more Chinese tech companies to look for funding in their domestic market. Smartphone company ZTE was recently blocked from selling its phones in the US, while Huawei saw its plans for a deal with US networks fall through.
"The ZTE saga will not have helped in terms of sentiment," Li added, "although Xiaomi will have been planning their move long before this."
The listing would be a boon for the Hong Kong stock exchange, which has relaxed its rules to make it easier for companies to list. While the Asian rival to the New York stock exchange had a slow 2017, investors and bankers hope the market could see up to US$500b of technology floats, as Chinese tech firms mature and choose their local market for a listing.
Who is Lei Jun?
Founded in 2010, Xiaomi has grown into one of the world's top smartphone companies in just eight years under the leadership of entrepreneur Lei Jun.
Launched by Lei and seven co-founders, Xiaomi made its mark with popular smartphones offering premium features, while selling them at cheap prices to undercut rivals such as Apple.
At 48, Lei has long been a prolific investor and entrepreneur. He spent more than a decade with software company Kingsoft, becoming its chief executive and leading its float.
He also founded Joyo.com, an online book store, which he sold to Amazon for US$75 million in 2004.
In 2010 he launched Xiaomi, along with several former Google and Motorola engineers.
Lei said in his letter to investors the company was started to design a "very cool smartphone that we would personally love".
He is known internally as a micro-manager, obsessing over the intricate details of the company's new smartphones.
The company now sells its phones in 70 markets around the world and employs about 15,000 people.
Lei's entrepreneurial aims still resonate at Xiaomi. In his letter to investors, he said the company was planning to incubate "100 other 'Xiaomis" to build a tech ecosystem.
It has expanded into other tech advancements like the internet of things, virtual reality, action cameras and software, while it has also invested heavily in other tech start-ups.
He also expressed the aim that Xiaomi would grow far beyond China to become a global company.
Lei said: "We have changed how hundreds of millions of people live, and we will become a part of the lives of billions of people globally in the future."