China: Facial recognition developer Megvii turns to Shanghai IPO after being blacklisted by US for alleged involvements in human rights violations in Xinjiang
"China’s Megvii kick-starts IPO on Shanghai’s Star Market after Trump added facial recognition giant to entity list" 13 January 2021
China’s Megvii Technology, one of the foremost developers of facial-recognition technology, is looking to favourable policies and more receptive investors at home to help bankroll its expansion in artificial intelligence.
The Beijing-based owner of facial-recognition software Face++ has kick-started an initial public offering (IPO) on the Nasdaq-like Star Market in Shanghai. The Post reported in April that it was mulling such a plan. Megvii attempted to list in Hong Kong but let its application lapse in February last year after it was included on the Trump administration’s trade blacklist in October 2019. Inclusion on the blacklist meant that investment banks and overseas investors were likely to eschew taking part in the listing.
An IPO would give Megvii’s shareholders, including Alibaba Group Holding – the owner of the Post – a chance to exit or partially sell their shares. Other shareholders of Megvii include Alibaba’s affiliate Ant Group, the personal computer maker Lenovo, Foxconn, the world’s largest contract electronics manufacturer, and the Abu Dhabi Investment Authority (Adia).
Megvii applied for a US$500 million IPO on the main board of Hong Kong’s stock market in August 2019. Later that year, the company hit pause on business activity to communicate with clients and suppliers about the US government’s decision to include it on a blacklist for alleged human rights violations against Muslim minorities in China’s Xinjiang region.The firm was one among eight companies included on the so-called entity list. Since then Washington has added more companies as US-China relations have deteriorated.
Megvii objected to its inclusion on the list and said it had generated only around 1 per cent of its revenue from projects in Xinjiang in 2018 and no revenue from the area in the six months ended June 30. [...]