Foxconn Industrial Internet (FII) is reportedly all set to begin the process on May 24 for an initial public offering (IPO) expected to bring in $4.26 billion in investments for the company. That follows an initial filing on the matter earlier this month and an official announcement on May 22. Specifically, the company – which serves as the communication network equipment development arm of Foxconn – is looking to move up to 1.97 billion shares based on a valuation of $43 billion. Approximately 30-percent of those are expected to be sold to strategic investors whose investments will be effectively be locked in for between one and three years. The remaining 70-percent will be locked in at up to one year. The goal of the IPO seems to be bringing an end to reliance on building iPhones, with Apple being one of the primary OEMs FII services. The offering represents about 10-percent of its enlarged issued share capital.
The company also serves other mobile clients such as Amazon, Huawei, and Lenovo. So the ultimate goal could also be presumed to be simply diversifying away from smartphones entirely if not for earlier reports suggesting the company planned to invest heavily in its current and future 5G projects. While the next-generation networks are expected to primarily support non-mobile devices and the burgeoning IoT, mobile is still expected to make up a sizeable portion of its use. The company has also reportedly divulged that a substantive portion of the funding will be pushed into smart manufacturing, industrial internet, and cloud computing. At least of the surface, nearly all of that seems to center around a focus on future tech in the IoT, with the exception of smart manufacturing. The latter may point to modifications in the processes used by FII to develop and build out that the solutions entailed in the category.
In the meantime, this IPO actually represents the largest since 2015 and the fourth largest in the past ten years. Moreover, the pricing is set at around 17 times FII's historical earnings as compared to the 23 times earnings generally favored by local regulators. The significance of that is that its approval is seen as representative of China's seriousness when it comes to bringing tech giant's into the Beijing Exchanges.