Xiaomi raises $1.2 billion from bonds as Beijing “stimulates” technology businesses

Chinese smartphone “giant” Xiaomi will raise about $ 1.2 billion from bond issuance in the context of the country’s authorities “tending” large technology corporations.

By the end of 2020, Xiaomi had raised $3.91 billion, including a stock offering in the Hong Kong market. Photo: Shutterstock

In particular, Xiaomi – the world’s third largest smartphone maker – will raise $ 800 million from a bond issue maturing in 2031 with an interest rate of 2.875% per annum. Proceeds will be used for “general corporate purposes”, according to the license application.

In addition, the Chinese smartphone maker will also issue $ 400 million in the form of “green bonds” at an interest rate of 4.1% per year. Green bonds are debt issued to raise funds to support environmental projects. Xiaomi said that the proceeds of this round will be used to fund projects that are eligible under its “green financial framework”.

Xiaomi is constantly expanding its business globally and is looking to break into new areas such as electric vehicles. In March, the group announced it would launch its electric vehicle business and invest $10 billion over the next 10 years.

By the end of 2020, Xiaomi had raised $3.91 billion, including a stock offering in the Hong Kong market.

Xiaomi has previously been entangled in geopolitical tensions between the US and China. In January 2021, the administration of former US President Donald Trump listed Xiaomi on the list of “companies with ties to the Chinese military” (referred to as CCMC). This means that Americans will not be able to hold shares of Xiaomi.

In response, the Chinese smartphone maker challenged the Trump administration’s allegations in court. In March, a US judge “blocked” the restraining order from President Trump.

Xiaomi’s plan to issue bonds this time comes after Beijing strengthens supervision of the technology sector. Over the past year, the Chinese government has enacted legislation in many areas, from financial technology (fintech) to antitrust and data protection.

Beijing’s recent target is the ride-hailing super app Didi. After Didi listed in the US last month, Chinese authorities conducted a cybersecurity review of the super app and ordered the removal of Didi’s app from app stores. of China.