China-based image-recognition software provider Megvii has received approval for a $500m initial public offering that would allow e-commerce group Alibaba and contract manufacturer Foxconn to exit, Reuters reported yesterday.
The offering has been approved by the Hong Kong Stock Exchange, according to two sources with direct knowledge of the matter. It filed for the IPO in August 2019 but was asked to supply additional information by regulators and plans to submit an updated filing imminently.
Also known as Face++, Megvii has produced artificial intelligence software that can identify images, objects and faces. It has also developed a deep learning framework called Brain++ and a data management product known as Megvii Data++.
Citigroup, Goldman Sachs and JPMorgan are underwriters for the revised offering, and the company is expected to re-file once the Chinese New Year, which runs for about a week at the end of this month, has concluded.
Megvii has raised $1.9bn altogether, including $750m in series E funding from Alibaba, financial services firm Bank of China, Macquarie Group, Abu Dhabi Investment Authority, and Industrial and Commercial Bank of China’s ICBC Asset Management unit at a $4bn valuation in May 2019.
Foxconn invested $20m as part of a $100m series C round in 2016 that included financial services firm China Construction Bank’s CCB International Holdings unit, before Alibaba and private equity firm Boyu Capital reportedly provided at least $600m in mid-2018.
The company’s earlier backers include Legend Star, a subsidiary of conglomerate Legend Holdings, as well as Sinovation Ventures, Qiming Venture Partners and Innovation Works.
Megvii’s largest investors as of August were Alibaba affiliate Ant Financial (a 15.1% stake), Alibaba subsidiary Taobao (14.3%) and China Venture Capital Fund Corporation (11.3%) while Bank of China holds 4.9%, Foxconn 1.6%, Legend Holdings’ Lenovo 1.4%, and insurer Sunshine Insurance 1.4%.
