Beijing-based facial recognition company Megvii has indeed pressed ahead with its push for a Q4 IPO in Hong Kong, but has reportedly run into a regulatory obstacle.
Citing anonymous sources “with knowledge of the matter”, Reuters reports that the Hong Kong Stock Exchange’s Listing Committee did not approve Megvii’s application last week, with committee members asking Megvii officials for more information before a listing can be approved. Some of the questions that regulators posed to the company seem to have been related to its placement on a US blacklist of China-based companies over its alleged involvement in human rights abuses undertaken by the Chinese government against Uighur Muslims in the region of Xinjiang.
In an IPO filing earlier this year, Megvii acknowledged that a Human Rights Watch report implicating the company in Xinjiang abuses had done “significant damages” to its reputation despite HRW’s subsequent clearing Megvii of wrongdoing. Nevertheless, Megvii has said that it did operate in Xinjiang, with the region accounting for about one percent of its revenues in 2018 (and none in the first half of 2019).
Founded in 2011, Megvii is best known for its Face++ facial recognition platform. In China, the use of biometric surveillance has become widespread over the past several years, and the government has involved itself in the promotion of domestic AI specialists that are active in the space.
Biometric surveillance is an increasingly sensitive issue in Hong Kong, which has been wracked by protests over political interference from mainland China for months. Protestors have often covered their faces out of concern over authorities’ use of facial recognition, while Hong Kong police have declined to confirm or deny their use of such technology on protestors.
If Megvii’s application for its Hong Kong IPO is accepted, it could become the first Chinese AI company to go public.
November 27, 2019 – by Alex Perala