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Chinese AI unicorn Megvii to list in Hong Kong

Company says it will use IPO funds for expansion abroad and acquisitions

AI startup Megvii is known for its facial recognition technology.   © AP

SHANGHAI -- Beijing-based artificial intelligence startup Megvii Technology has filed for an initial public offering in Hong Kong to fund expansion plans locally and abroad.

The proposed IPO comes amid rising tensions in the financial city as well as pushback against Chinese technology companies by countries concerned about possible cyber espionage.

Known for its facial recognition technology, the eight-year-old company says in the prospectus posted on the Hong Kong Stock Exchange website on Sunday that the listing will enable it to live up to its goal of being "transparent and accountable."

"We want to attract global talent and expand our business globally," said Yin Qi, Megvii's co-founder who also serves as chairman and chief executive. 

The Alibaba Group Holding-backed startup is planning to use the funds raised -- potentially $1 billion, according to Bloomberg -- to improve its technology by hiring more AI scientists, and expanding its data centers and sales network. As part of its global expansion strategy, Megvii is looking to set up businesses in Japan, Singapore, Thailand and the Middle East.

It generally takes companies less than six months to list in Hong Kong after filing for an IPO. Megvii's application comes at a time of increased tensions in Hong Kong. Violent clashes between anti-government protesters and police have rattled businesses in the territory, notably delaying a planned second listing by Alibaba.

In May, Bloomberg reported that the U.S. government was considering banning Megvii and four other companies from doing business with American firms. The report said Washington was concerned that these companies played a role in the surveillance technologies deployed in the remote Chinese region of Xinjiang, where thousands of Uighur Muslims have been placed in detention camps for alleged extremist activities. Megvii had said it was not aware it had been marked by the U.S. government.

Megvii was formed by Qi and classmates Tang Wenbin and Yang Mu from Tsinghua University, one of China's top universities. In May, it raised $750 million in Series D equity funding round, attracting investors including the Abu Dhabi Investment Authority and MacquirieGroup.  

U.S. financial institutions Goldman Sachs, J.P. Morgan and Citi Group are joint sponsors of the IPO.

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