Chinese smartphone, TV maker says Hong Kong portion of offer was heavily oversubscribed; shares due to start trading on Monday

Xiaomi has revealed that its arguably over-hyped initial public offering was almost 10 times oversubscribed in Hong Kong, the Chinese equipment maker having priced its shares at the low end of its previously announced range.

The firm received applications for 1.03 billion shares, or 9.5 times the 108.98 million shares available for subscription in Hong Kong, which represented 5% of its global offering. The international portion of the IPO was moderately oversubscribed, with 2.4 billion applications for 2.07 billion shares.

Xiaomi priced the offer at HK$17 per share, the bottom end of the HK$17-HK$22 range it shared last month, meaning the whole IPO raised just over HK$37 billion (US$4.7 billion/€4 billion).

The company said its net receipts from the sale will come in at HK$23.97 billion. It has allocated 30% of the proceeds for hardware R&D, 30% to strengthen its presence in IoT and lifestyle products, 30%for global expansion; and the remaining 10% for working capital and general corporate purposes.

The low price of the IPO values Xiaomi at around US$54 billion, according to the financial newswires, which is almost half the US$100 billion figure being bandied about earlier in the year.

It is worth pointing out that the offer price is still close to 40 times Xiaomi’s 2018 earnings and 23 times its projected 2019 earnings, according to Reuters’ data, making it significantly more expensive than the likes of Apple, for example.

Xiaomi’s shares are due to begin trading on Monday.