China's Xiaomi Corp priced its Hong Kong initial public offering (IPO) at the bottom of an indicative range, raising $4.72 billion in the world's biggest tech float in four years, people close to the transaction said on Friday. That values the firm at about $54 billion, almost half the valuation industry insiders touted at the beginning of the year.
The pricing comes at a delicate time for Hong Kong's stock market, with the benchmark Hang Seng index falling 6.5 percent this month and 4.8 percent this year as investors fret over escalating trade tension between the United States and China.
As such, Xiaomi's share sale is widely seen as a test of market sentiment for what is expected to be a packed second-half of the year for Hong Kong IPOs, with offerings including online food delivery-to-ticketing services platform Meituan Dianping.
China Tower, the world's largest mobile mast operator, has won approval for a Hong Kong IPO that could raise up to $10 billion. However, its listing timing will depend somewhat on how well Xiaomi's deal is received, sources have told Reuters.
"Xiaomi's pricing won't be good news for market sentiment," said Hong Hao, chief strategist at BOCOM International. "But other IPO candidates will still flock to the market to list before market conditions become more challenging."
Xiaomi is selling about 2.18 billion shares at HK$17 each ($2.17), the bottom of a price range of HK$17 to HK$22, two of the people said. That makes the IPO the largest in the technology sector since Alibaba Group Holding Ltd raised $25 billion in New York in 2014.