Alibaba-backed AI startup Megvii files for IPO in Shanghai

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[SHANGHAI] Megvii Technology is poised to become the first major Chinese artificial intelligence startup to go public after it filed for a Chinese Depositary Receipt offering on Shanghai's Star board on Friday.

The startup, backed by Alibaba Group Holding, plans to issue up to 253 million Class B shares as the underlying stock for the CDR offering, according to its prospectus. The offering may raise at least six billion yuan (S$1.24 million) after fees, which will be used to fund research and development in robotics and visual Internet of Things as well as to replenish capital, the filing shows. Citic Securities Co is the sponsor of the listing.

Megvii is one of the world's largest AI startups, specialising in areas such as facial recognition. The eight-year-old firm gained fame in part because of China's obsession with security, which in turn drove a nationwide video-surveillance boom. It registered a loss of 1.03 billion yuan, excluding one-time items, in the first nine months of 2020, according to its prospectus.

The company's application for a Hong Kong listing about two years ago lapsed after it become one of several Chinese companies the Trump administration blacklisted over alleged involvement in human rights violations against Muslim minorities in China. It now joins Lenovo Group in taking advantage of the CDR program Beijing kicked off three years ago to lure promising startups and big names to mainland bourses.

Proceeds from the listing will be used to beef up areas including research and production capacity, the company said in an emailed statement.

"The listing environment on STAR is mature and government policies support and encourage innovative enterprises to go public, so we chose STAR," it said.

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