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Xiaomi official Facebook page Xiaomi, the fast-rising Chinese smartphone maker, is in talks to raise close to $1.5 billion in new capital at a valuation set to exceed $40 billion, in the
largest private financing for a venture-backed company since Facebook in 2011. Negotiations with investors including DST– the Russian internet company that also backed Alibaba, Facebook and
Airbnb – are yet to be finalized, according to people familiar with the discussions. But if completed, the deal would propel the four-year-old Chinese company to the top tier of the global
technology industry at a valuation exceeding that of Sony and Lenovo put together. Xiaomi declined to comment on its fundraising plans. The private stake sale would also price Xiaomi at more
than double Silicon Valley's most richly-valued private company, Uber, which raised $1.2 billion at a $17 billion valuation this summer. Read MoreChina's Xiaomi becomes
third-largest smartphone maker According to CBInsights, which tracks private financings, a $1.5 billion capital injection would match Facebook's 2011 fundraising, which valued the
social network at $50 billion inits last round before it went public, as the largest amount ever raised by a venture-backed company. Both Wall Street and Silicon Valley investors are largely
sidelined in the fundraising for the latest Chinese technology sensation after Alibaba, which has a market capitalization of $270 billion after going public in New York in September.
Instead Xiaomi is hoping to secure funds from Asia-based investors. "Alibaba and Xiaomi are similar in that there's a lot of people out there who wished they had invested, but at
the time they thought the valuations were way too high and then they missed it", said a person with knowledge of both companies. "In retrospect they regret it." IDC, the
technology researcher, said last month that Xiaomi's smartphone sales were outstripped only by Samsung and Apple in the third quarter, thanks to the popularity of the Mi4 handset
launched in August. The company has built its brand on producing handsets that aim to compete with international rivals on quality, but at a much lower price. MORE FROM THE FINANCIAL TIMES:
US set for strong jobs growth ECB ready to inject €1tn extra liquidity Ex-Goldmanstar Thornton joins PineBridge Xiaomi shipped 17.3 million smartphones in the three months ending in
September, up 211 percent on the third quarter of 2013, just ahead of Lenovo and LG Electronics, IDC said, although Xiaomi still holds only 5 percent of the market. Despite such growth, some
argue that Xiaomi remains a risky proposition at such a high price, given the rapid rise and fall of smartphone makers such as Motorola and HTC, and the emergence of lower-cost handsets in
Asia. Unlike Apple, which controls its own hardware, software and services, Xiaomi is reliant on Google's Android operating system. But with a $1.5 billion war chest Xiaomi could
continue its push into new markets across Asia and Latin America, and add new devices to its portfolio of smartphones, tablets, routers and television equipment. It is also investing in its
own TV content. Read MorePalo Alto Networks discovers new malware affecting Appledevices "They see themselves as more than Apple", said the person with knowledge of Xiaomi.
"They want to 'out-Apple' Apple in the sense that they're integrating hardware, software, content and services into a broad ecosystem." Xiaomi's "rock
star" launch events and sell-out products, coupled with online distribution and minimal advertising spending, have produced unprecedented growth in both revenue and profits, according
to people familiar with the company. However, prospective backers may have to wait years for a return on their investment. Xiaomi's founders have maintained that they do not plan to go
public for five years. The company has also found little trouble in accessing cash. Xiaomi recently agreed a $1 billion loan with 29 banks, with the funds likely to be used to finance its
push into new markets, such as Brazil and Indonesia.