Chinese phone maker Xiaomi picks Morgan Stanley, Goldman Sachs for est. $100bn IPO

(FinancialPress) —  Chinese tech manufacturer Xiaomi has put megabanks Goldman Sachs Group Inc. and Morgan Stanley, among other major financial institutions, in charge of their planned initial public offering – an inside source has revealed.

Credit Suisse Group AG and Deutsche Bank AG have also been linked to the IPO operation, which the anonymous source revealed is poised to target a valuation as high as $100 billion. Chinese underwriters are still under consideration by the Beijing-based company, which has still not finalized details of date and location for the share sale.

The company has already led a previous money raise in 2014, when it tapped a $45 billion valuation. This IPO operation could be the largest since AliBaba‘s $25 billion debut. After 2016 saw its market share take a nosedive for disastrous overall-year results, a revamp in its sales model has proven successful. It has also made an incursion into India, where it has successfully put itself neck-and-neck against Samsung Electronics Co. as the biggest vendors in the sector. In 2017, the company broke its sales target of $15 billion in October.

Representatives from Xiaomi, Goldman Sachs, Credit Suisse, Morgan Stanley and Deutsche Bank declined to comment

The news filtration harmed the valuation of Xiaomi‘s rivals, with Lenovo Group Ltd. shares dropping 1.8% and ZTE Corp losing 2.4%.

Led by Lei Jun – chairman and co-founder of the company -, Xiaomi looks to enter developed markets as it makes its position in emerging ones such as Russia and India consolidated. 2017 saw the brand go into Spain and it has also been rumored that its currently looking for deals with carriers in the U.S. to enter the Apple Inc. dominated turf.

James Yan, an analyst for Counterpoint Research, revealed that Xiaomi‘s experience running an online community that‘s estimated to be 200 million strong, added to the extra experience it has in software development, could generate even further revenue from in-app ads and from monetizing the growing data on its users.

“The Chinese smartphone market looks stable for Xiaomi, but expanding sales from ecosystem partners could drive Xiaomi’s valuation,” he said. In software, “Xiaomi enjoys a big edge as other Chinese vendors lack a well-established software business.”


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