China’s Megvii faces HKEX queries on IPO application

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 giant Megvii Technology Ltd. is facing additional queries from the Hong Kong bourse ahead of its planned initial public offering, people familiar with the matter said.

Some questions relate to public complaints about whether the company adequately disclosed risks related to U.S. sanctions, the people said, asking not to be identified because the information is private. Megvii, which met Hong Kong Exchanges & Clearing Ltd.’s listing committee Thursday, will need to address the concerns before it receives formal clearance to go ahead with the share sale, the people said.

A recent online campaign has been encouraging people to send complaints to the listing committee and HKEX Chief Executive Officer Charles Li, lobbying the exchange not to approve Megvii’s listing application. A letter circulated online said Megvii breached the listing rules by failing to make adequate disclosures of sanction risks.

Megvii filed its IPO documents in August. The exchange’s queries aren’t necessarily an indication it will block the listing, and in some previous cases it has allowed a deal to go ahead after receiving a company’s explanations. A representative for Megvii declined to comment.

The IPO could be the unofficial debut on global stage for China’s artificial intelligence industry. The AI startup is among several Chinese companies that the Trump administration blacklisted over alleged involvement in human rights violations against Muslim minorities in China.

Megvii has said it “strongly objects” to the blacklisting and that the company complies with all regulations in the markets in which it operates.

Any deal will add to the $34.3 billion raised in Hong Kong IPOs this year, according to data compiled by Bloomberg. The startup counts Alibaba Group Holding Ltd. and its financial affiliate Ant Financial and Lenovo Group Ltd. as strategic investors.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. are the joint sponsors of the deal, according to a preliminary prospectus.

Bloomberg

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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.