A big player in China’s plan to dominate artificial intelligence filed to go public in Hong Kong against the backdrop of violent protests in the city, where protests are decrying encroaching Chinese control and companies have pulled or delayed IPO plans.
Megvii Technology Limited, a Beijing-based company known for its facial recognition product Face++, is looking to raise as much as $1 billion, according to Reuters.
The company develops artificial intelligence products built on facial-recognition algorithms. The products range from consumer electronics to city governance, and clients include Ant Financial, Lenovo and several Chinese government entities.
The announcement comes on the heels of Megvii’s $750 million funding round in May, which put the company’s valuation at $3.25 billion, according to Pitchbook.
Megvii’s backers include Bank of China Group Investment, the private equity arm of the state bank; Alibaba Group; Macquarie Group; GGV Capital; and Abu Dhabi Investment Authority, Abu Dhabi’s sovereign wealth fund.
- Several Chinese companies have slowed or abandoned plans to list in Hong Kong amid political and financial instability in the city. Last week, Chinese e-commerce giant Alibaba delayed its planned $15 billion Hong Kong listing, according to Reuters.
- Criticism of facial recognition technologies is brewing, particularly in the U.S. Three cities — San Francisco and Oakland, California, and Somerville, Massachusetts — have banned use of the technology by police and city agencies, and Megvii specifically has garnered attention of the New York-based Human Rights Watch.
- “As we plan to expand our operations in additional overseas markets and regions, we may have to adapt our business models to the local market due to various legal requirements and market conditions,” Megvii wrote in its IPO prospectus.
- Over the weekend, protesters in Hong Kong were recorded sawing down and destroying “smart” lampposts believed to be equipped with facial recognition technology.
- “Facial recognition’ has officially become a dirty word,” China Money Network founder Nina Xiang wrote in a Medium post. “Because of high reputational risks, Megvii is positioning itself as an IoT company, not a facial recognition company or even an artificial intelligence company.”
Karma Take: Criticism of the ethics of facial recognition technology — along with continued trade tension between the U.S. and China — could significantly slow global expansion of Megvii and its Chinese peers.