XIAOMI Corp. priced its Hong Kong initial public offering (IPO) at the bottom of an indicative range, raising US$4.72 billion in the world’s biggest tech float in four years, people close to the transaction said Friday.

That values the firm at about US$54 billion, almost half the valuation industry insiders touted at the beginning of the year.

The pricing comes at a delicate time for Hong Kong’s stock market, with the benchmark Hang Seng index falling 6.5 percent last month and 4.8 percent this year as investors fret over escalating trade tension between the United States and China.

As such, Xiaomi’s share sale is widely seen as a test of market sentiment for what is expected to be a packed second-half of the year for Hong Kong IPOs, with offerings including online food delivery-to-ticketing services platform Meituan Dianping.

“Xiaomi’s pricing won’t be good news for market sentiment,” said Hong Hao, chief strategist at BOCOM International. “But other IPO candidates will still flock to the market to list before market conditions become more challenging.”

Xiaomi is selling about 2.18 billion shares at HK$17 (US$2.17) each, the bottom of a price range of HK$17 to HK$22, two of the people said. That makes the IPO the largest in the technology sector since Alibaba Group Holding Ltd. raised US$25 billion in New York in 2014.

The HK$17 price represents a multiple of 39.6 times 2018 earnings and 22.7 times Xiaomi’s 2019 earnings forecast by its underwriting syndicate. At present, rival Apple Inc. is trading at 17 times trailing earnings and 14 times forward earnings, showed Thomson Reuters data.

“I’m not surprised at all by its pricing at the bottom,” said Hong. “It claims to be a hardware plus Internet services company, but the majority of its revenues come from the smartphone business. It’s still way more expensive than Apple on a price-earnings basis.”

Xiaomi’s price values the firm at US$53.9 billion before the exercise of a “greenshoe” or over-allotment option, whereby additional shares are sold depending on demand.

The valuation is far below the US$100 billion touted by sources earlier this year as well as the more recent US$70 billion-plus target that some analysts and investors saw as aggressive. Xiaomi was valued at US$46 billion in its last fundraising in 2014. (SD-Agencies)