Alibaba-backed artificial intelligence (AI) startup Megvii has applied for a Hong Kong listing, coming at a time of political unrest in the city and broader economic uncertainty.
Why it matters: Megvii’s facial recognition technology is used widely around China in applications ranging from mobile payments to surveillance, with the company being a key supplier to China’s public security organs.
- Megvii is moving forward with its listing plans even as other companies including Alibaba wait to gauge investor sentiment following months of protests in Hong Kong.
- The company was reportedly rethinking its listing plans earlier this year as a result of the ongoing trade tensions between the US and China.
- Megvii provides its technology to companies including Ant Financial, Foxconn, and Xiaomi.
Details: Megvii did not disclose how much the company seeks to raise in documents submitted to the Stock Exchange of Hong Kong, but estimates range from $500 million to $1 billion, according to people cited by Reuters and Bloomberg.
- The company’s filing does provide insights into how it is faring: Megvii’s revenue for the first half (H1) reached nearly RMB 950 million (around $133 million), up more than 200% compared with the same period last year. Full-year revenues in 2017 and 2018 were RMB 313.15 million and RMB 1.42 billion, respectively, according to the filing.
- The company generated nearly three-quarters of its sales from AI services provided to government agencies and the healthcare industry, among others.
- Meanwhile, Megvii’s 2019 H1 losses reached RMB 5.2 billion, which the company attributed, in part, to research and development spending.
- Megvii in May raised $750 million in a funding round led by Bank of China’s equity arm. The investment valued the company at more than $4 billion.
Context: Megvii is one of a handful of startups at the forefront of China’s AI boom, including Sensetime, Yitu, and Cloudwalk, though none of them have yet gone public.
- These companies have benefited from government plans to build China into an AI frontrunner by 2030.
- China is home to a growing number of AI startups in China, a number of which have their eyes on capital markets.