Chinese AI start-up Megvii plans to resubmit Hong Kong IPO application after it lapsed due to coronavirus delays

Megvii failed to submit updated financial data on time due to disruptions caused by the coronavirus outbreak, according to people familiar with the matter

The company, which aims to be the first listed Chinese AI firm, is said to be planning to resume its application after its full-year financial report is out

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A screen shows the facial technology at Megvii (or Face++), a company focusing on delveopment of facial recognition technology. Photo: SCMP/Simon Song

Published: 5:30pm, 25 Feb 2020Updated: 10:56pm, 25 Feb 2020

Chinese artificial intelligence company Megvii Technology plans to resubmit its application for a US$500 million Hong Kong initial public offering (IPO) after its original application lapsed on Tuesday, according to two people familiar with the matter.

Under the Hong Kong bourse's rules, Megvii had six months to get approval and complete the offering after submitting the listing application on August 25. If it resubmits a new application within three months after the application lapsed on Tuesday, this will be considered an extension of the original application. However, after three months it will have to restart the IPO application process.

The city’s stock exchange cleared Megvii’s IPO application last month, but the Beijing-based company failed to submit updated financial data on time due to disruptions caused by the coronavirus outbreak in China, said the people, who did not want to be named as they were not authorised to discuss the matter.

Megvii declined to comment on its listing status, but the people said the application is expected to resume after the company files its full-year financial report for 2019.

The company, which aimed to be the first dedicated Chinese AI firm to go public, said last October that a decision by the US government to put it on a trade blacklist could disrupt its IPO plans, but that it was “ready for the fight”.

It was among eight Chinese AI firms to be put on the so-called Entity List over alleged human rights violations related to the Chinese government's treatment of Uygur Muslims and other predominantly Muslim ethnic minorities in Xinjiang.

Megvii was last valued at more than US$4 billion after having raised US$750 million in May last year. Backed by Alibaba Group Holding – the parent company of the Post – and its affiliate Ant Financial among others, the start-up tripled its revenue year-on-year to 949 million yuan (US$133 million) in the first half of 2019. Over 73 per cent of its sales came from Internet of Things (IoT) contracts at a city level, while facial recognition services on consumer devices and supply chain automation accounted for about 22 and 5 per cent of its revenue respectively.