This is probably the next big IPO. Xiaomi technology is founded by Lei Jun, which is China`s Steve Jobs. Along with Alibaba`s Jack Ma, he is also the face of China Inc. His company Xiaomi is expanding overseas.
Xiaomi Inc was founded in 2010 and is a privately owned Chinese electronic company headquartered in Beijing. The company develops, and sells smartphones, mobile apps, and customer electronics. Products they run is MiPhone, MiBox, MiTalk, MiHome launcher, Duokan Reader, MiCloud and MiTV. Lei Jun founded the company together with Hong Feng, Zhou Guangping, Li Wanqiang, Huang Jiangji, Lin Bin, Liu De and Wang Chuan.
Xiaomi sold more smartphones in China than Apple Inc and Samsung Electronics Co! But it is worth saying that Xiaomi has a low-cost business model. They run Google`s Android mobile OS, and has become the world`s fifth largest smart phone maker behind Samsung, Apple, Lenovi and Huawai.
They are a low-cost company and belive that when it costs you $200 to make a product, you should sell it for $600. Innovation is not a luxury item. Innovation is for everyone. That`s Xiaomi`s thoughts.
The company is looking to expand into Brazil and Mexico, and has moved beyond China to sell their products in India and Indonesia. India is the world`s second largest cellphone market after China.
Xiaomi needed money for their expansion, and borrowed $1 billion from 29 different banks for a three-year loan.
The lead bankers on the loan are Goldman Sachs Group Inc, Credit Suisse Group SA, Deutsche Bank AG, J.P Morgan Chase & Co, Bank of Tokyo-Mitsubishi UFJ, Banco do Brasil, Morgan Stanley, ICBC Asia and a subsidiary Chinese lender of Industrial & Commercial Bank of China Ltd. Xiaomi is borrowing at attractive terms and the bankers are charging them 2,325% points over London interbank offered rate for the loan it is borrowing in two tranches. Normally, company’s similar to Xiaomi are charged 2,5% points over Libor.
Xiaomi raised a fourth round of funding in August 2013, and that valued the company at $10 billion, and that is more than double its June 2012 valuation of $4 billion. The $1 billion loan now is their first overseas.
Investment banks see business opportunities with Chinese technology companies in the future. Many investors belive we are in a tech bubble, but lenders feel more comfortable now with the technology industry than they did only a few years ago.
The reason why we had a tech bubble in 2000 was that many of the companies listed on Nasdaq didn`t have income. Xiaomi sold about 18 million phones in the past year, and it is forecasting sales of 60 million units in 2014. Bubble? I would rather say; possibly the next big IPO!
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