Megvii, a China-based image-recognition software provider backed by e-commerce group Alibaba, filed for an initial public offering yesterday that, according to Reuters, could raise up to $1bn.
The company plans to float on the Hong Kong Stock Exchange and will raise at least $500m according to one unnamed source, and possibly up to $1bn according to another, who said the offering is expected to take place in Q4 2019.
Also known as Face++, Megvii produces artificial intelligence technology used to scan and recognise images, faces, objects and vehicles. It almost tripled revenue to RMB949m ($138m) year on year in the first half of 2019, making a $16.8m operating loss that represented a slight improvement on the period in the preceding year.
The IPO will follow almost $1.9bn of funding, including $750m in a series E round led by a $200m investment from Bank of China Group Investment, a vehicle operated by financial services firm Bank of China, in May this year.
The series E, which valued Megvii at $4bn, included Alibaba, Macquarie Group, Abu Dhabi Investment Authority and ICBC Asset Management, which invests on behalf of financial services provider Industrial and Commercial Bank of China.
Alibaba and private equity firm were among the contributors when Megvii raised ‘at least’ $600m in a July 2018 round that came after a $100m series C in 2016 featuring $20m from contract manufacturer Foxconn and an undisclosed sum from CCB International Holdings, a part of financial services firm China Construction Bank.
Legend Star, a venture capital fund formed by Legend Holdings – the owner of electronics producer Lenovo – is also an investor in the company, having supplied an undisclosed amount in 2013 that was followed by series A funding from investment firm Sinovation Ventures in 2013.
Sinovation Ventures subsequently took part in Megvii’s $22m series B round in 2014 alongside Qiming Venture Partners. The company added $25m in a series B-plus round featuring Qiming and Innovation Works the following year.
Ant Financial, Alibaba’s financial services affiliate, is Megvii’s largest investor, with a 15.1% stake, while its Taobao subsidiary holds 14.3%. Foxconn owns 1.6%, while Lenovo holds 1.4%, as does insurance firm and hitherto unrevealed investor Sunshine Insurance.
Other notable shareholders in Megvii include China Venture Capital Fund Corporation (11.3%) and Bank of China (4.9%). Goldman Sachs (Asia), JP Morgan Securities (Far East) and Citigroup Global Markets Asia are the joint sponsors of the IPO.
