Jan 10, 2019 (China Knowledge) - Smartphone manufacturer Xiaomi’s shares plunged to a record low yesterday as a 6-month lockup period following the company’s IPO ends.
More than 3 billion shares, or 19% of the company’s outstanding share capital was unlocked yesterday, leading to a “mass exodus”, bringing the company’s share price down by nearly 7% to close at HKD 10.34 per share.
At the time of writing, Xiaomi’s shares have fallen by another 6.7% and are trading at HK 9.64 per share.
Following the sell-off, the company’s controlling shareholders, founder and chairman Lei Jun together with Smart Mobile Holdings and Smart Player which hold a combined 31% stake of the company, have all agreed not to sell their stakes for another 365 days, whether directly or indirectly.
The company’s share price has now fallen more than 40% from its IPO price of HKD 17 per share with some employees and cornerstone investors unable to exit their investments due to the lock-up period.
Xiaomi may continue to see further share price pressures with early stage venture capital and private equity investors likely to make an exit in the near future. Between September 2010 to December 2014, the company had held 9 rounds of equity financing, raising USD 1.6 billion from these investors.
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