Blacklisted Unicorn Mulls Offshore IPO Retreat
China’s Megvii Technology – a leading developer of facial recognition tech and suspected human rights abuser – is considering a retreat from its Hong Kong listing application.
Relatively less favorable policies and less receptive investors in the offshore market are driving Megvii to consider an initial public offering in Shanghai’s tech board, Star Market, instead, according to an «SCMP» report citing unnamed sources.
Megvii allowed its application to lapse in February after applying for a $500 million IPO for the mainboard in August last year. The firm has another three months to resubmit its application as an extension before it has to restart the entire process.
In the first six months of 2019, Megvii registered operating losses of over 115 million yuan ($16.2 million, according to filing documents.
Xinjiang
Of the major issues believed to be troubling Megvii is the U.S. government’s decision to blacklist the company due to claims about its role in alleged human rights abuse against Muslim minority Uyghurs in northwestern province Xinjiang as a facial recognition technology provider. At the time when U.S. announced the classification in October 2019, Megvii said the decision could disrupt its listing plans.
The firm also objected to its inclusion on the list, stressing that just about 1 percent of its revenue was derived from Xinjiang-based projects in 2018 and that it had made no revenue from this source in the six months ending June 30, 2019.
Politics aside, one of the major considerations for Megvii’s Hong Kong listing is its desire to diversify its shareholder base which currently includes the likes of Alibaba’s Ant Financial Services, computer maker Lenovo, the world’s largest electronics manufacturer Foxconn and the Abu Dhabi Investment Authority.
