Xiaomi eyes new funding that would skyrocket value to S$64b

BEIJING — Last year, China’s Xiaomi netted a financing round that valued the then-three-year-old mobile start-up at US$10 billion (S$12.9 billion). Now, just a little more than a year later, Xiaomi is in the early stages of talks for a funding round that could value the world’s third-largest smartphone maker at about US$40 billion to US$50 billion (S$64.5 billion), people familiar with the matter said.

Founder and chief executive officer Lei Jun has pushed Xiaomi, which sells direct to consumers and only released its first smartphone in 2011, into new markets from Singapore to India. The international expansion, combined with surging sales of its Mi 4 smartphone and low-cost Redmi model, have vaulted the company into the ranks of the world’s top vendors.

“They have a cost advantage over many of the larger vendors because of their online sales model,” said Mr James Roy, a Shanghai-based analyst at China Market Research Group. “It’s been a really dramatic rise for Xiaomi in the past four years from nothing.”

The valuation surpasses more established Asian electronics makers including Sony, which has a market capitalisation of about US$21 billion, and Lenovo Group’s $16 billion.

Xiaomi’s valuation would also exceed recent funding rounds that pegged US start-ups Uber Technologies at US$17 billion and Snapchat at US$10 billion. DST, an existing investor, is among the potential participants in the funding round, a source said.

Xiaomi was backed in earlier funding rounds by investors including Temasek Holdings, Qiming Venture Partners, Qualcomm Ventures, IDG Capital and Morningside Venture Capital.

Xiaomi has been winning users by selling inexpensive phones with hardware and specifications comparable with more expensive devices. It more than tripled global smartphone shipments to 17.3 million units in the third quarter from 5.6 million a year earlier, IDC reported last week. Its market share more than doubled to 5.3 per cent from 2.1 per cent, the researcher said. That lifted Xiaomi into the world’s top three vendors for the first time, trailing only Samsung Electronics and Apple, IDC reported.

The company has also begun branching from phones into other consumer electronics. In May, the company unveiled its first tablet computer, the Mi Pad. The company earlier released the MiBox, a TV set-top box, and televisions that connect to the Web, running the Android operating system.

Xiaomi said yesterday it would spend US$1 billion to expand its Internet TV content as it ramps up its push into the living room, and a market estimated to be worth US$3 billion.

In a post on its official Weibo microblog, Xiaomi said it had hired Mr Chen Tong, a former executive at Chinese Internet firm Sina, to overhaul the TV business and make it more “diverse and exciting”.

“We want to repeat the success of Xiaomi’s hardware integration model in the television industry,” Mr Chen said at a press conference, according to Xiaomi’s microblog. The company did not to provide further details. AGENCIES