Xiaomi sells $5.5 billion worth of shares to boost its car ambitions

Xiaomi is preparing to seriously prop up its electric vehicle arm by raising $5.5 billion through an upsized share sale. The company is aggressively pushing into the EV sector, a venture it began only last year with the launch of its SU7 sedan. The Hong Kong-listed tech giant sold 800 million shares at HK$53.25 each, way over the intended 750 million shares, suggesting strong investor confidence.

The share sale comes amidst a surge in Xiaomi's stock price, which has jumped nearly 150% in the last six months. Despite the final share price landing towards the lower end of the initially suggested range of HK$52.80 to HK$54.60, the offering was heavily oversubscribed. Over 200 investors participated, with the top 20 securing approximately 66% of the offered stock.

Xiaomi will use the fresh funds to accelerate business expansion, research, and technology development. The investment is vital to the company's plans to ramp up its EV production and meet its revised delivery target of 350,000 units this year. For 2024, the company reported RMB 32.1 billion ($4.4 billion) in revenue for its EV business, with over 135,000 SU7 sedans delivered.

Xiaomi is getting ready to start shipping its electric cars overseas by 2027. To support this growth, the company has acquired a 52-hectare (128.5-acre) plot of land in southern Beijing for the construction of the third phase of its auto factory. Additionally, Xiaomi President Lu Weibing announced that a quarter of the company's 2025 research and development budget, roughly RMB 7 to 8 billion, will be allocated to artificial intelligence development.

This latest capital raise by Xiaomi is part of a wider trend of Chinese tech companies tapping into the Hong Kong market for funding. This is partly attributed to an apparent easing of government scrutiny following a recent summit between Chinese President Xi Jinping and tech industry leaders. Prior to Xiaomi's share sale, Chinese firms had already raised $16.8 billion in equity capital in the first quarter, more than doubling the figures from the same period last year.

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