The China Security Regulatory Commission (CSRC) published Xiaomi Corporation's CDRs (China Depositary Receipts) prospectus early in the morning of June 11th. CITIC Securities is the sponsor and the lead underwriter. The prospectus shows that Xiaomi will grant equity incentives to gradually split Xiaomi Finance Inc. to make it an independent subject of operation.
By the signing date of the prospectus, Lei Jun had held 55.7% voting right of all shareholders' voting right through the Class A ordinary shares and Class B ordinary shares in Xiaomi held by Smart Mobile Holdings Limited and Smart Player Limited. In addition, according to the voting right assignment agreement signed between other shareholders and Lei Jun, Lei has another 2.2% of the voting right as a trustee. Therefore, Lei actually holds 57.9% of the issuer's voting right in total.
The prospectus shows that the raised fund after deducting issuance fee will be used in the following aspects:
30% for the development of core independent products;
30% for expanding and strengthening the ecosystem of Internet of Things, consumer goods and mobile Internet services (including AI);
40% for global expansion;
The CDR prospectus shows that Xiaomi posted operating revenue of RMB 34.41 billion in the first quarters of 2018, compared with the RMB 66.81 billion, RMB 68.43 billion and RMB 114.62 billion earned in 2015, 2016 and 2017. Net profits attributable to parent company shareholders made a loss of RMB 7 billion in the first quarter of the year, compared with the loss of RMB 7.58 billion, earning of RMB 553 million and loss of RMB 43.82 billion in the same period of the past three years. Net profit attributable to equity holders of the Company after deduction of non-recurring profit or loss was RMB 1.03 billion in the first quarter, compared with the loss of RMB 2.24 billion, earnings of RMB 233 million and RMB 3.94 billion in the same period of the last three years.
The prospectus shows that Xiaomi has built the world's largest consumer Internet of Things platform, connecting over 100 million smart devices (excluding mobile phones and laptops). In the first quarter of 2018, Xiaomi held a 1.9% share in the world's consumer Internet of Things market based on the number of connected devices.
Xiaomi's prospectus also shows that Xiaomi will grant equity incentives to gradually split Xiaomi Finance Inc. to make it an independent subject of operation. By signing of the prospectus, Xiaomi Corporation's finance related businesses including supply chain financing, Internet small loans, payment, financial management products distribution and Internet insurance had been restructured and incorporated into Xiaomi's wholly owned subsidiary Xiaomin Finance.
From 2018, besides the one-time restructuring loan Xiaomi Corporation offered for Xiaomi Finance's restructuring, the upper limit of the former's financial services for the latter will be RMB 12.7 billion, RMB 14.9 billion and RMB 14.5 billion in the coming three years, totaling RMB 42.2 billion. The two sides have also set the upper limit for marketing, comprehensive support and payment settlement services.
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