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Breakfast Briefing: Xiaomi IPO, Alibaba’s AI & Bitmain in Canada

Xiaomi Chooses Banks for IPO

The Chinese smartphone maker selected Morgan Stanley and  Goldman Sachs, among others, to advise on its IPO.

Editor’s Remarks: The IPO is expected to value Xiaomi at as much as $100bn, according to sources familiar with the deal. That is well over double its $45bn valuation during its last round of funding in 2014, and is likely to be the biggest IPO since Alibaba’s listing in New York. Alongside Goldman and Morgan Stanley are Deutsche Bank and Credit Suisse; the company is so far unsure about what role Chinese banks will play in the deal. After a poor 2016, Xiaomi has bounced back by expanding aggressively into India.

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SoftBank Ponders IPO

The Japanese conglomerate is thinking about spinning off its telecoms business.

Editor’s Remarks: SoftBank is considering listing its domestic telecoms business on the Tokyo stock exchange to take advantage of a buoyant IPO market. Time is of the essence because the company’s founder, Masayoshi Son, wants a potential IPO to be before the planned float of Toshiba’s memory chip unit, which was bought last year by a Bain Capital-led consortium. The SoftBank IPO could be worth as much as $18bn according to bankers close to the matter. The sale is also motivated by SoftBank’s weak share price, which its founder feels is an overreaction to the company’s relatively high debt levels.

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Alibaba AI Beats Humans

The Chinese company has developed an AI system that beat humans in a reading test.

Editor’s Remarks: The AI model was required to provide exact answers to around 100,000 questions for the Stanford Question Answering Dataset (SQuAD). The SQuAD is considered to be the most definitive and rigorous test for measuring AI capabilities, and Alibaba’s AI certainly rose to the challenge. The program scored 82.44, which superseded the 82.304 scored by a group of humans taking the same test. Alibaba was quick to announce that it was the first AI system to beat humans at such a test. However, Microsoft’s own AI system scored 82.650 on the same test, but its results were finalised a day later.

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Bitmain Considers Canada Move

The Chinese bitcoin miner is looking to expand abroad and is eyeing up Canada.

Editor’s Remarks: Although Bitmain has not confirmed that it is seeking an overseas relocation because of China’s recent announcement that it will clamp down on cryptocurrency trading, it is unlikely to be a coincidence. Just a few days ago, the company said it had also opened a new branch in Switzerland, which would play an essential role in its further global expansion. Now, it has publicly said that it is considering an expansion to Canada’s Quebec region, which will give Bitmain access to cheap hydropower to power its mining operations, leading a number of crypto miners to move there.

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Carillion Collapses After Default

One of the UK government’s biggest contractors has collapsed after it drowned in debts and a huge pension deficit.

Editor’s Remarks: Carillion received an order for compulsory liquidation early yesterday morning after last-minute talks with the UK’s Cabinet Office and bankers fell through over the weekend. The company has debts amounting to £900m and a pension deficit of £587m, which sealed its fate. Carillion’s troubles worsened over the summer when it announced it was turning a loss on several key contracts, which was causing its debt levels to rise. The company then wrote off £800m and cancelled its dividend, leading to a huge fall in Carillion’s share price. For many, the liquidation was a long time coming.

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