Alibaba-backed Chinese AI startup Megvii files for HK listing, eyes at least $500m

FILE PHOTO: The logo of Face++ facial recognition software is seen at the Security China 2018 exhibition on public safety and security in Beijing, China, October 24, 2018. REUTERS/Thomas Peter

Chinese AI firm Megvii Technology Ltd, backed by Alibaba, has filed in Hong Kong to conduct an IPO targeting proceeds of at least $500 million, two people said, just as the city faces political unrest and its first recession in a decade.

Beijing-based Megvii, widely known for facial recognition platform Face++, may raise as much as $1 billion in the initial public offering, said one of the people, who expect the share sale in the fourth quarter of the year.

The filing comes as companies postpone or slow down listing plans in a recession-bound city blighted with nearly three months of anti-government protests, and where the benchmark Hang Seng share price index fell to seven-month lows this month.

Reuters reported last week that China’s biggest e-commerce firm, Alibaba Group Holding Ltd, had delayed its up to $15 billion Hong Kong listing.

Megvii has decided to press ahead with its IPO plans because it has little business in Hong Kong and expects the unrest to ease later this year, said a third person.

Megvii declined to comment. The people who had direct knowledge of the matter declined to be identified as the information was not public yet.

AI LEADER

Megvii, founded in 2011 by Chief Executive Officer Yin Qi and two friends from Tsinghua University, would become the first Chinese artificial intelligence firm to go public in Hong Kong.

Its filing comes amid government plans for China to become an international leader in AI, a technology that is becoming increasingly central in various sectors.

Once the preserve of researchers, AI has grabbed the attention of businesses as varied as healthcare and financial services looking to use algorithms to comb through troves of data to recognise patterns and solve problems.

In May, Megvii raised $750 million from investors including Bank of China Group Investment Ltd (BOCGI) Ltd and Australia’s Macquarie Group Ltd at a valuation of slightly over $4 billion.

The company, also backed by Ant Financial, provides facial recognition and other AI technology to governments and companies including Alibaba, Ant Financial, Lenovo Group Ltd and Huawei Technologies Co Ltd .

It booked a loss of 3.35 billion yuan ($472 million) on revenue of 1.43 billion yuan last year, widening the loss from 759 million yuan a year earlier. Its adjusted operating profit, which excludes one-off items such as share-based compensation payments, reached 75.7 million yuan last year, showed its draft prospectus.

It will use IPO proceeds primarily for research and development, marketing and sales plus global expansion and strategic investments opportunities, the prospectus showed.

Citigroup, Goldman Sachs and JPMorgan are joint sponsors of the IPO.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.