Chinese AI firm Megvii to refile for Hong Kong IPO

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 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.

Reuters

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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.