China AI start-up to file for Hong Kong IPO soon despite protests

Megvii's filing will kick off the formal process for an IPO, though it could be months before its actual debut.
Megvii's filing will kick off the formal process for an IPO, though it could be months before its actual debut.PHOTO: MEGVII/FACEBOOK

HONG KONG (BLOOMBERG) - Chinese artificial intelligence start-up Megvii is filing documents soon for a Hong Kong initial public offering that could raise as much as US$1 billion (S$1.4 billion), people familiar with the matter said, brushing aside a market downturn spurred by pro-democracy protests across the financial hub.

The owner of facial-recognition platform Face++ plans to submit an IPO filing to the Hong Kong Stock Exchange as soon as on Friday, one of the people said, asking not to be named because the matter is private. Megvii declined to comment.

Megvii is moving forward even as other companies pump the brakes on their Hong Kong IPO ambitions, wary of months of protests that have gripped the city and rocked its stock market. Alibaba Group Holding, a backer of Megvii, is among those that are gunning for a Hong Kong listing but have held back to gauge investors' reception.

Megvii's filing will kick off the formal process for an IPO, though it could be months before its actual debut.

The Beijing-based company is part of a coterie of artificial intelligence outfits underpinning China's ambition of leading the field by 2030. It competes with SenseTime Group Ltd - also backed by Alibaba - in facial and object recognition technology and Internet of Things software.

The seven-year-old outfit now provides face-scanning systems to companies from iPhone-maker Foxconn Technology Group to Lenovo Group and Ant Financial, the payments giant that supports Alibaba's e-commerce business. Its facial recognition technology has provided verification services to more than 400 million people, Megvii said in a statement in January.

Beyond commerce, the company is also building software for sensors and robots. And the Chinese government is a client: Megvii's AI technology has been used by authorities in more than 260 cities and helped police arrest more than 10,000 people, it said in January.

The company last raised US$750 million in a Series D financing round in May from investors including China Group Investment, ICBC Asset Management (Global), Macquarie Group and a unit of the Abu Dhabi Investment Authority. Its other backers include Boyu Capital, Ant, SK Group, Foxconn, Qiming Venture Partners and Sinovation Ventures.