Xiaomi Chooses IPO Banks for Planned $100 Billion

Chinese smartphone maker Xiaomi has picked Citic Securities, Goldman Sachs and Morgan Stanley as joint sponsors for its proposed IPO.

The initial public offering could be the world's biggest tech float this year — valuing the company at up to $100 billion - and is expected to come in the second half of the year.

Credit Suisse Group AG and Deutsche Bank AG have also been chosen to work on the IPO, the person said, asking to not be identified as the details are private. The Beijing-based company is still considering Chinese underwriters and is yet to decide on the timing and location of the share sale, the person said.

The smartphone maker last month told bankers that it would beat its 2017 sales targets by up to 18 percent as it continues to benefit from a business overhaul that followed over-expansion and fierce competition from domestic rivals including Oppo and Vivo.

Xiaomi, which raised money at a $45 billion valuation in 2014, could be the biggest IPO since Alibaba Group Holding Ltd.’s $25 billion debut. After a disastrous 2016 that saw its market share plunge, the smartphone maker has bounced back by revamping its sales model and pushing heavily into India, where its rival Samsung Electronics Co. is the biggest vendor. The company topped its annual 100 billion yuan ($15 billion) sales target by the end of October.

Under chairman and co-founder Lei Jun, Xiaomi is looking to enter developed markets for smartphones as it consolidates positions in emerging markets such as India and Russia. It entered Spain last year and is also said to be talking to U.S. carriers to sell devices on Apple Inc.’s home turf.

“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.”

Xiaomi’s biggest competitors at home, which includes Huawei Technologies Co. and Oppo. After early success with an online flash sales model, which saw devices available on its website for a limited time, Xiaomi found itself outflanked by domestic rivals such as Oppo and Vivo that cultivated relationships with retailers. They helped its competitors win new customers who wanted to touch and test new handsets before buying.

Lei has responded with an ambitious push to expand Xiaomi’s own retail network. The company plans to build 1,000 “Mi Home” stores by 2019 -- about twice Apple’s global store count -- targeting 70 billion yuan of retail sales by 2021.

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