Midea IPO to Break Hong Kong's Fundraising Record 2024
Midea plans a $20-$30B IPO in Hong Kong, marking the biggest offering of 2024.
- ChinaVenture | Tao Huidong
- September 8, 2024
- 3:41 pm
- No Comments
Midea Group, one of China’s largest home appliance manufacturers, is set to launch Hong Kong’s biggest Media IPO of 2024. The company recently announced that it passed the listing hearing on the Hong Kong Stock Exchange (HKEX), with plans to go public by the end of September.
While Midea’s stock issuance will not exceed 10% of its total shares, reports suggest that the IPO could raise between $20 to $30 billion USD. This would be a significant leap from the previous largest IPO this year—Cha Baidao, which raised only HK$25.86 billion. The listing is expected to break fundraising records for Hong Kong in 2024, with Midea making a bold statement amidst a year with few major IPOs.
Despite sitting on cash reserves of over 1 trillion yuan, Midea’s decision to list in Hong Kong isn’t driven by financial need. The company’s 2024 half-year report reveals impressive performance, with revenues exceeding 218.1 billion yuan and a net profit of 20.2 billion yuan, backed by 335 billion yuan in operational cash flow. As a “cash cow,” Midea could easily solve its funding needs by reducing dividends, which in 2023 alone totaled over 20 billion yuan.
The real motive behind Midea IPO Hong Kong lies in its pursuit of global expansion. As the company’s executives explained during its 2023 shareholders meeting, listing in Hong Kong offers “breakthroughs, convenience, and speed” in accessing international markets. Midea aims to use the Hong Kong capital platform to strengthen its global brand influence, attract international investors, and facilitate overseas mergers and acquisitions.
With rivals like Gree and Haier in the rearview mirror, Midea has emerged as China’s dominant player in the white goods industry, boasting a market value of 462 billion yuan as of September 3rd—more than double that of its competitors. Furthermore, Midea has secured its position as the world’s largest home appliance company by sales in 2023.
Midea’s ambition is now firmly set on the global stage. In the first half of 2024, the company reported a 10.3% increase in revenue, driven largely by a 13.09% growth in its overseas markets, compared to an 8.37% growth domestically. Nearly 42% of Midea’s income now comes from international markets, underscoring the success of its overseas expansion.
In a recent speech, prominent economist Zhou Qiren praised Midea for its global vision, highlighting that few Chinese companies can match Midea’s international revenue proportion. As Zhou emphasized, Midea’s ability to achieve 40% of its revenue from abroad is a testament to its forward-looking strategy.
Midea is also known for its strategic use of capital to fuel its growth. Over the years, the company has diversified through a series of high-profile acquisitions, including Japan’s Toshiba Home Appliances, Italy’s Clivet, Germany’s KUKA, and Israel’s Servotronix. In China, Midea bolstered its portfolio with the acquisition of Little Swan, enhancing its washing machine business.
Beyond the main business, Midea controls several publicly listed companies in China. These include Hefei Meiling, Wanlida Medical, and more recently, Kelu Electronics, a smart grid and energy storage firm. The founding He family has also been active in the capital markets, expanding their influence. Midea’s controlling shareholder, Midea Holdings, is owned by He Xiangjian and his family, who also control Midea Real Estate and other substantial investments.
Looking ahead, Midea is continuing its capital expansion with plans to spin off subsidiaries for independent listings. Last year, the company announced plans to list its logistics subsidiary, Ande Zhilian, on the Shenzhen Stock Exchange.
In summary, Midea’s IPO in Hong Kong is more than just a fundraising event—it’s a pivotal move in the company’s strategic push to solidify its position as a global technology giant. With its expansive capital empire and aggressive international growth, Midea is set to reshape its global image far beyond the boundaries of China’s home appliance industry.
