(Yicai) March 25 -- Xiaomi's stock price fell after the Chinese maker of home electronics and electric cars raised about HKD42.5 billion (USD5.5 billion) from a discounted share placement to fund research and development as well as its business expansion.

Xiaomi [HKG: 1810] closed 6.3 percent lower at HKD53.40 (USD6.87) a share in Hong Kong today. The stock hit an all-time high of HKD59.45 on March 19 after the Beijing-based company reported record earnings for last year.

Xiaomi placed 800 million shares priced at HKD53.25 apiece with at least six investors, representing 3.1 percent of its total share capital, the company announced early today. That was a 6.6 percent discount on yesterday’s closing price of HKD57.

A softer share price following a stock offering is not uncommon, as the additional shares issued dilute existing shareholder equity, often leading to a perceived loss of value in their holdings and triggering a near-term sell-off.

Following the placement, the stake of Xiaomi founder and Chairman Lei Jun drops to 23.4 percent from 24.1 percent, though he remains the company’s largest shareholder.

Xiaomi's net profit jumped 35 percent to CNY23.6 billion (USD3.3 billion) in the 12 months ended Dec. 31, its earnings report showed on March 18. Revenue also rose 35 percent to CNY365.9 billion (USD50.4 billion) thanks to strong sales of smartphones, Internet of Things devices, and electric cars, it said.

Last December, President Lu Weibing said Xiaomi will increase R&D spending on artificial intelligence, while overall R&D outlays will likely jump 25 percent to CNY30 billion this year.

Editor: Martin Kadiev