China's Xiaomi Corp announced it has raised $5.5 billion through an increased share sale as the company advances its ambitious plans for electric vehicle production.
Xiaomi, the third-largest smartphone manufacturer globally, transitioned into EV production last year and initially intended to issue 750 million shares but decided to expand the offering during the bookbuilding phase.
The final share price settled near the lower end of the indicated range of HK$52.80 to HK$54.60 provided to investors when the deal launched on Monday.
Currently, Xiaomi's shares fell by 5.3 percent in Hong Kong, coinciding with a 2.1 percent decline in the Hang Seng Index.
Over 200 investors submitted orders during the bookbuilding process, which resulted in the offering being oversubscribed several times.
The price represented a 6.6 percent discount from Xiaomi's closing share price of HK$57 early this week. Xiaomi indicated that the funds raised would facilitate the acceleration of its business expansion, along with research and technological advancements.
Last year, Xiaomi entered the EV market with the introduction of the SU7 sedan, following its history of selling smartphones, home appliances, and smart devices for 15 years.
The company reported a nearly 50 percent increase in revenue for the fourth quarter last week and has revised its electric vehicle delivery target for this year from 300,000 to 350,000.
For 2024, Xiaomi announced a revenue of 32.1 billion yuan ($4.4 billion) for its EV operations, delivering over 135,000 SU7 sedans. The company plans to commence international car shipments by 2027.
Xiaomi plans to allocate approximately 7-8 billion yuan, a quarter of its total 2025 budget of 30 billion yuan for research and development, towards AI, as stated by President Lu Weibing last week.
This share sale adds to a flurry of technology-focused fundraising activities by Chinese companies in Hong Kong, as businesses capitalize on the positive market sentiment surrounding the tech industry.
A meeting led by Chinese President Xi Jinping with prominent tech executives last month was broadly interpreted as an indication that the rigorous government oversight that began in 2020 is starting to ease.
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Prior to Xiaomi's share issuance, Chinese companies had completed equity capital market transactions totaling $16.8 billion in the first quarter, according to LSEG data, which is more than double the amount from the same timeframe last year.