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.