Chinese mobile phone company, Xiaomi, is forking out US$1.82 million to buy a 9.87 percent stake in a subsidiary owned by Chinese software company, Kingsoft.
Both companies reached a share purchase agreement where Kingsoft Cloud Group will issue and sell a total of 91 million Kingsoft Cloud shares at US$0.02 per share, according to a filing at the Hong Kong Stock Exchange issued Friday.
Kingsoft Cloud will use the proceeds from the sale to develop its principal business, plough it back into capital expenditures and general working capital, or toward other purposes as approved by the board of the group, the statement said.
The company said it develops technology services which can be used on smartphone platforms and decided to sell its shares to Xiaomi, which smartphones are popular and highly sought after in China. Having Xiaomi as an investor and business partner will promote and strengthen Kingsoft's position to become one of the leading cloud storage providers in China, it added.
Xiaomi in October announced plans to expand its business into Taiwan, Hong Kong and Singapore via online sales. It said it would introduce handsets to markets "similar" to mainland China and was targeting to do so by the end of 2012.
The smartphone maker last month also launched a set-top box, called Xiaomi Hezi, which allows users to wirelessly stream videos, images, and music content to a television.