Chinese artificial intelligence company Megvii Technology, which is on a U.S. blacklist, plans to refile for a Hong Kong initial public offering after its current application lapses on Tuesday, two people with direct knowledge of the matter said.
Megvii‘s application will lapse next week six months after it was filed partly because of the impact of the coronavirus epidemic which has disrupted business activity in China.
The company had hoped to raise between $500 million and $1 billion in its IPO, sources previously told Reuters.
Megvii plans to refile for the deal as soon as it has updated financial data for 2019, said the people, who declined to be named as they were not authorised to speak to media.
The virus, which has claimed over 2,200 lives and caused widespread disruption in China, has also slowed down work by Megvii‘s auditor Deloitte, the sources said.
Megvii and Deloitte declined to comment.
The planned IPO was already facing a hurdle due to the U.S. blacklisting, which bars Megvii from buying U.S. parts and components without U.S. government approval and was expected to make some prospective foreign investors, in particular U.S. ones, wary, said the other source.
Megvii was put on the blacklist along with seven other Chinese companies for their alleged involvement in human rights violations related to Beijing’s repression of Muslim minority populations in the Xinjiang Uighur Autonomous Region.
Megvii said at the time it strongly objected to being blacklisted, and there were “no grounds” for the designation.
Megvii, known for its facial recognition platform Face++, has long wanted to be the first Chinese AI firm to go public.
Under Hong Kong rules, the stock exchange would consider a new application within three months of the lapsed one as a renewal or continuance of the original one, smoothing the process should Megvii choose to return with updated information.
The refiling could come as soon as the end of March when Megvii expects to have its 2019 financials audited, said one of the sources.
Megvii was founded in 2011 by Chief Executive Yin Qi and two friends from Tsinghua University. The company provides AI technology to governments and companies including Alibaba, Ant Financial and Huawei.