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After aborted Hong Kong IPO, AI unicorn Megvii shifts to Shanghai’s Star Market

Written by Song Jingli Published on     2 mins read

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Megvii’s Hong Kong IPO application lapsed after it appeared on the US government’s Entity List.

Artificial intelligence unicorn Megvii, well known for its facial-recognition technology, has initiated plans for an initial public offering (IPO) on the tech-focused Star Market of the Shanghai Stock Exchange, the Beijing bureau of the China Securities Regulatory Commission disclosed on Tuesday.

The Shanghai-based company has been receiving pre-listing tutoring, a necessary step for an IPO on the Chinese mainland, from Citic Securities since September 29, which was unknown to the outside until the regulators’ disclosure. Key shareholders, such as the founders Yin Qi and Tang Wenbin, and the executive management team are being trained in legal procedures, accounting knowledge, and corporate governance improvement related to the IPO.

On August 25, 2019, Megvii applied for an IPO on the Hong Kong Stock Exchange, but it landed on the US government’s Entity List two months later, which led to concerns over the impact on the firm’s supply chain. Six months after the filing, the company’s Hong Kong IPO application lapsed.

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Megvii told KrASIA in February of last year that its Hong Kong IPO application was still on track and could be reactivated after submitting additional files containing updated financial data for 2019. However, the documents have never been renewed.

The company, founded in 2011, made RMB 949 million (USD 133 million) in total revenue in the first six months of 2019, compared to RMB 305.8 million in the same period in 2018. It booked a net loss of RMB 5.2 billion in the first half of 2019, up from RMB 728.9 million in the same period in 2018.

Megvii closed its Series D financing round in May 2019, collecting USD 750 million from investors including Bank of China, the Industrial and Commercial Bank of China, a subsidiary of the Abu Dhabi Investment Authority, as well as Macquarie Group.

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