The reduction of holdings and cashing out has damaged the market environment. It is rumored that the regulator may crack down on the disorderly expansion of Xiaomi's capital

Recently, there have been market rumors that there have been major changes in the IPO policy for the ecosystem represented by Xiaomi.

According to rumors, the IPO companies in the industrial chain invested by Xiaomi that are waiting in line have suffered a devastating disaster. It is said that the regulatory authorities have conducted an investigation into the current Science and Technology Innovation Board and Growth Enterprise Market that are under review and involve the Xiaomi industrial chain. The reason is that they are worried that the companies that support the listing of orders through business transfer will cash out and then support other companies, forming a vicious circle.

Rumor has it that this week the Shenzhen Stock Exchange and the Shanghai Stock Exchange conducted an investigation into listed companies (Sci-Tech Innovation Board, ChiNext) and companies under review that are involved in Xiaomi's industrial chain, including whether there is any Xiaomi investment and whether there is any behavior of boosting business and expanding sales after the investment.

An agency revealed that we also have a company under review that provides camera coating services for Xiaomi phones and was asked to withdraw its materials. Currently, the review process is quite averse to industrial capital investment and the exchange of industrial capital investment for business.

It is reported that this year's government report proposes: "Strengthen and innovate supervision, combat monopoly and prevent disorderly expansion of capital, and maintain fair competition."

According to the information, Lei Jun and his partners have announced that they will cash out more than 10 billion yuan from several companies including Ninebot and Stone Technology.

As the "first CDR stock" in the A-share market, on the evening of November 12, 2021, Ninebot issued an announcement stating that three depositary receipt holders, namely Sequoia, People Better, and Shunwei, intend to reduce their holdings of the company's depositary receipts by no more than 75.68 million shares through centralized bidding or block trading within the next six months, accounting for a total of no more than 10.74% of the total number of the company's depositary receipts.

Sequoia currently holds 100 million depositary receipts of Ninebot, accounting for 14.21% of the total number of depositary receipts of the company. Sequoia intends to reduce its holdings by no more than 33.4 million, accounting for no more than 4.74% of the total number of depositary receipts of Ninebot.

People Better is a company controlled by Xiaomi. Currently, People Better holds 65.03 million Ninebot depositary receipts, accounting for 9.23% of the company's total depositary receipts. People Better plans to reduce its holdings by no more than 21.14 million, and the proportion of the planned reduction in depositary receipts to the total number of Ninebot depositary receipts will not exceed 3%;

Shunwei, or Shunwei, is a Xiaomi-affiliated investment fund. It currently holds 65.03 million Ninebot depositary receipts, accounting for 9.23% of the company's total depositary receipts. Shunwei plans to reduce its holdings by no more than 21.14 million shares, and the proportion of the planned reduction in depositary receipts to the total number of Ninebot depositary receipts will not exceed 3%.

It is worth noting that Sequoia, People Better and Shunwei participated in Ninebot’s Series A financing as early as the end of 2014. This means that the investment cycle of the above three shareholders in Ninebot lasted for 7 years.

As of November 12, 2021, the closing price of Ninebot's depositary receipts reached 66 yuan per share, and the company's stock price has risen by 248% in the past year since its listing. As of the close of March 28, 2022, Ninebot closed at 45 yuan per share. Since November 12, 2021, the company has fallen by nearly 30%.

Previously, when Ninebot went public, the IPO Examination Committee determined that it was not appropriate to use robots because it only had a scooter business. Later, the company had to change its IPO name to Ninebot. Even Lei Jun's parent company Xiaomi smartphones have always been considered just an assembly factory with little technical content.

On the other hand, Stone Technology previously stated that Jinmi and its directors, supervisors and senior executives, which are controlled by Lei Jun, plan to reduce their holdings by no more than 10.752%, which is also a significant amount. With Stone Technology's market value of 44.9 billion yuan at the time, this wave of reductions was worth nearly 5 billion yuan.

Since its peak in June last year, Stone Technology's stock price has been cut in half, from a peak of 1,492 yuan to around 550 yuan today, with a market value of less than 40 billion yuan. Moreover, since Lei Jun announced the reduction of his holdings, Stone Technology's stock price has fallen by nearly 20%, with the maximum retracement of nearly 30%.