Xiaomi IPO

Xiaomi Corp. has set tentative terms for the world’s biggest initial public offering in nearly two years, aiming to raise as much as $6.1 billion in Hong Kong, people with knowledge of the matter said.

The Chinese smartphone maker and existing investors plan to offer 2.18 billion shares at HK$17 to HK$22 apiece, according to the people, who asked not to be identified because the information is private. China Mobile Ltd., the nation’s biggest wireless carrier, and U.S. wireless-chip giant Qualcomm Inc. are among firms in talks to become cornerstone investors, the people said.

Beijing-based Xiaomi aims to start taking orders from institutional investors as soon as Thursday, the people said.

Xiaomi, led by serial entrepreneur Lei Jun, was the first to file for a Hong Kong IPO with a weighted-voting rights structure after the city’s bourse changed its rules in April. The deal could become the world’s biggest first-time share sale since September 2016, when Postal Savings Bank of China Co. raised $7.6 billion in a Hong Kong IPO, data compiled by Bloomberg show.

Trade Tensions

The Hong Kong dollar strengthened 0.04 percent, the biggest intraday advance in nearly two weeks, to HK$7.8462 per dollar as of 7:37 p.m. local time Wednesday. The one-month interbank rate rose four basis points to 1.77822 percent. That benchmark, known as Hibor, has climbed for 16 straight sessions to reach the highest level since 2008 amid concerns funds will be drained by large IPOs in the city.

China Mobile and Qualcomm have been discussing potential investments of around $100 million each in the Xiaomi IPO, according to the people with knowledge of the matter. An affiliate of Chinese express delivery firm SF Holding Co. is in talks to buy about $30 million of stock, the people said.

CMB International’s private equity arm has been discussing a potential HK$1.5 billion ($191 million) investment, while an investment fund run by China Development Bank is in talks to buy HK$518 million of shares in the Xiaomi offering, the people said. A fund backed by China Merchants Group is negotiating the purchase of about HK$220 million in stock, according to the people.

Qualcomm, whose Snapdragon chips have been used in Xiaomi’s flagship phones, is preparing to buy stock in the IPO amid increasing trade tensions between China and the U.S. It has also been waiting for formal acknowledgment that Chinese antitrust authorities have approved its $43 billion acquisition of NXP Semiconductors NV. Qualcomm’s venture capital arm is an existing investor in Xiaomi, its website shows.

Chinese Investors

Xiaomi was earlier planning to seek about $10 billion combined from the Hong Kong IPO and a near-simultaneous offering to mainland Chinese investors. It has since delayed its plan to float so-called Chinese depositary receipts in Shanghai, which was part of the government’s long-term goal of getting its biggest technology firms to list locally.

The company aims to finalize the list of cornerstone investors Wednesday, the people said. Details of Xiaomi’s offering, including the amount of stock to be bought by each cornerstone investor, could still change before the deal launches, the people said.

Representatives for Xiaomi, China Mobile, Qualcomm and CMB International declined to comment, while a person who answered the phone at SF Holding’s office in Shenzhen declined to transfer calls. Representatives for the other cornerstone buyers said they couldn’t immediately comment or couldn’t be reached.

CLSA Ltd., Goldman Sachs Group Inc. and Morgan Stanley are leading Xiaomi’s Hong Kong IPO as joint sponsors, according to an exchange filing last month. Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co. and six Chinese banks are also helping arrange the share sale, people with knowledge of the matter have said.