Alibaba-backed AI startup Megvii said to be weighing IPO this year

Hong Kong

MEGVII, the owner of facial recognition developer Face++, is considering an initial public offering in Hong Kong that could net as much as US$1 billion, people familiar with the matter said.

Megvii is weighing an IPO to raise between US$500 million and US$1 billion with Hong Kong as a destination, the people said, requesting not to be named because the matter is private. Deliberations are at an early stage and no final decision has been made as the details of the plans could still change, the people said.

The Beijing-based firm, backed by Alibaba Group Holding Ltd, joins rival artificial intelligence outfits raising funds to help fulfil the country's ambition of leading the field by 2030.

Megvii is competing with the world's largest AI startup SenseTime Group Ltd - also backed by Alibaba - as the two provide facial recognition technology to financial, retail, mobile and government clients. SenseTime itself is said to be in discussions to raise about US$2 billion.

"We have no specific IPO plans," Xie Yinan, a spokesman for Megvii, said in a statement.

Megvii provides face-scanning systems to companies including Lenovo Group Ltd and Ant Financial, the payments company that underpins Alibaba's e-commerce platforms.

Beyond commerce, facial recognition technology has attracted interest from government authorities who want to be able to detect crimes and threats to social stability before they take place.

Megvii's software uses facial scans held in a Ministry of Public Security database drawn from identification files on about 1.4 billion Chinese.

The startup's investors include Boyu Capital, Ant Financial, SK Group, and the Russia-China Investment Fund, a venture backed by sovereign wealth funds of the two nations. Other backers include Foxconn Technology Group, CCB International Holdings Ltd, Qiming Venture Partners and Sinovation Ventures.

It was said to be raising a US$500 million round in December at a valuation of up to US$4 billion, people familiar with the matter said at the time.

Ant Financial is formally known as Zhejiang Ant Small & Micro Financial Services Group. BLOOMBERG