Honor seeks expansion capital ahead of potential IPO

Honor, a former unit of Huawei Technologies, is looking to raise expansion capital ahead of its public listing, which could come as early as this year, reported Bloomberg citing sources.

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The Chinese smartphone maker is already in talks with investors to raise foreign funding, which would distance Honor from Huawei and from the risk of China-related sanctions. Honor needs the fund injection to grow its global presence and strengthen its domestic retail and ecommerce operations.

Sources told Bloomberg that overseas investors remain wary about future US restrictions against the former Huawei subsidiary, while Honor’s expected US$45 billion valuation may also be a cause for concern. This could lead Honor to seek a domestic listing in China. However, no such plan has been finalized yet, and a dual listing remains an option.

The expected valuation, which was pegged to competitor Xiaomi’s share price when Honor was sold by Huawei in 2020, has made bringing in new investors challenging amid the gloomy outlook for the global smartphone market. A writedown in its valuation is also a difficult prospect, given its heavy exposure to state-owned capital of more than US$1.5 billion, noted the report.

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