The initial public offering (IPO) of one of China's largest artificial intelligence firms, Megvii, is now back on track. This was after the Hong Kong Stock Exchange cleared the company for its planned $500 million listing in the city.
The AI firm, which was put on the United States' trade blacklist in October, filed for its IPO in August. The company was asked by the city's stock exchange for additional information as it faced a comprehensive review from the exchange's listing committee following the blacklisting, effectively delaying its IPO.
With the clear go-ahead signal, Megvii could very well be the first Chinese AI firm to go public. Megvii, which is popularly known for the development of if advanced facial recognition platform Face++, was part of a list of eight companies that were placed under the US trade blacklist by the Trump Administration last year.
The company was accused of being directly involved in the alleged human rights violations by China in the Xinjiang Uygur autonomous region. During that time, Megvii outright denied any involvement in the crisis and strongly protested the US' blacklisting.
With the approval to go ahead with its IPO, Megvii is expected to submit its updated listing information to the Hong Kong exchange before it can proceed. According to sources close to the transaction, Megvii has sought the help of Citigroup, JPMorgan, and Goldman Sachs for its updated listing.
Under the Hong Kong Exchange's listing rules, which only allow for a six-month window to list from the date of application, Megvii will only have until February to launch its IPO. However, the company does have the option to apply for a three-month extension.
This means that Megvii could either launch its IPO next month or apply for an extension to list at a later date. The latter is more likely to happen as Megvii has yet to establish a timetable for its listing. Analysts also speculate that Megvii will likely want to wait to list after the Lunar New Year Holiday when financial markets are more favorable.
Its current CEO, Yin Qi, originally founded Megvii in 2011 along with his two friends from Tsinghua University. The Chinese government and large Chinese tech firms are using the company's AI-driven facial recognition platform and its other AI-driven products. Some of the company's more notable customers include e-commerce giant Alibaba, telecom giant Huawei Technologies, and Fintech firm Ant Financial Services.
Over the past few years, Megvii has slowly transformed itself into an AI powerhouse in China. In May of last year, the company had managed to raise more than $750 million in a funding round, elevating its market valuation to more than $4 billion.
