Xiaomi executives have denied claims that Lei Jun reduced his stake in Xiaomi, as the recent placement of 800 million shares in the Chinese tech and EV company sparked public speculation. On Monday, Wang Hua, the general manager of Xiaomi’s PR department, responded to claims on Chinese social platform Weibo, saying that the firm’s recently announced rights issue on the Hong Kong stock market was a common financing operation.
Why this matters: On March 25, Xiaomi announced plans to place 800 million shares under the “sell old, buy new” method at HKD 53.25 ($6.84) per share. The offering is expected to raise around HKD 42.5 billion ($5.46 billion) for business expansion, R&D development, and general corporate purposes, Xiaomi said. It ranks as the third-largest overnight placement in Hong Kong stock market history, behind Chinese EV manufacturer BYD and Chinese online services platform Meituan.
Details: Wang Hua clarified that in a Hong Kong rights issue, shareholders first place their shares with independent third-party investors, after which the company issues the same number of new shares to the shareholders. This process does not equate to a reduction of holdings by the major shareholders, Wang said.
- The 800 million share sales were completed on March 27, Xiaomi announced on Monday. These 800 million shares were sold at HKD 53.25 ($6.84) per share to no fewer than six independent third-party investors. After the completion of both the placement and subscription, issued shares increased from 25,116,213,416 to 25,916,213,416.
- Although Lei Jun, the major shareholder, did not reduce his stake according to the company, some raised concerns about the purpose of Xiaomi’s recent financing. While the firm stated the funds would be used for business expansion and R&D, it did not provide detailed investment plans or expected returns.
- Financial analyst Flora Xu told TechNode that a rights issue has relatively limited impact on shareholders, causing mainly short-term fluctuations in stock prices. “Although an overnight placement is rare, it is generally viewed as a positive signal and a standard financing activity,” Xu said. “Investors’ willingness to buy in reflects confidence in the company’s prospects, particularly its potential to profit from new ventures like car sales. Moreover, the management’s unchanged equity stake signals their own optimism about the company’s future.”
Context: Last month, Xiaomi announced it had delivered 136,854 Xiaomi SU7 series vehicles in 2024, the first year the Chinese phone maker had ventured into car manufacturing. CEO Lei Jun raised the firm’s 2025 new car delivery target from 300,000 to 350,000 during a related earnings call.
- Yesterday, Lei responded to the tragic incident involving a high-speed collision and explosion of a Xiaomi SU7, which resulted in the deaths of three young women on March 29. This marks Xiaomi’s first major public affairs crisis in its automotive division.
- Lei expressed deep sorrow over the loss and confirmed that the Xiaomi team had set up a special task force, which arrived at the scene on March 30 to assist the police investigation by providing vehicle data.
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