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China’s largest facial recognition startup, Megvii, is preparing for an initial public offering in Shanghai. The company is working with CITIC Securities to prepare for listing, the China Securities Regulatory Commission announced on January 12, China time.
The move came more than a year after Megvii, known for its facial recognition platform Face ++, filed for an initial public offering in Hong Kong in August 2019. At the time, Reuters reported that the company could raise between $ 500 million and $ 1 billion (about 103.67 billion yen). However, the company’s IPO application in Hong Kong has expired for private reasons and is currently focused on the Shanghai Stock Exchange’s STAR Board, a person familiar with the matter said. I told TechCrunch.
In 2019, China set up the STAR board to attract high-growth, unprofitable Chinese tech startups that had been leaking to the United States for many years. Meanwhile, domestic new share issuance is becoming more and more attractive to Chinese companies, especially those that rely on government contracts or are involved in the US-China high-tech competition.
Megvii and its rivals SenseTime, Yitu and CloudWalk are collectively referred to as China’s “Four Great AI Dragons” due to their market power and funding from ambitious investors. Megvii’s technology powers the infrastructure of smart cities across China and many smartphones and mobile apps. Investors such as Alibaba, Ant Group, and Bank of China have invested about 1.4 billion dollars (about 145.1 billion yen) in the company in the 10 years since its establishment.
AI Dragons are not well known outside of their own market. In 2020, Megvii, Yitu, and SenseTime were added to the US sanctions list (entity list) on suspicion of having played a role in enabling government mass surveillance of Muslim minorities in western China. CloudWalk was subsequently blacklisted in 2020 and separated from US suppliers.
According to a notice posted by Chinese securities authorities, Megvii plans to issue a Chinese Depositary Receipt (CDR), which is similar to a US depositary receipt and allows domestic investors to hold foreign stocks. This suggests that Beijing-based AI unicorns have not denied listing outside mainland China.
This week, Hong Kong-listed company Lenovo, the world’s top PC maker, also announced plans to sell its shares through CDR at the Shanghai Stock Exchange.
Currently, guidance is needed before the application, and Megvii’s listing plan still needs approval from Chinese regulators.