In a move that could bring in as much as $1 billion in funding, facial recognition firm Megvii is reportedly mulling an initial public offering (IPO). Sources, however, said that the idea is still in its beginning stages and the plan is not set in stone, Deal Street Asia reported.
A spokesperson for the company, Xie Yinan, told the outlet, “we are considering many options to raise funds, but have not committed to a final plan.” According to the report, however, the company is considering raising $500 million to $1 billion through the IPO, which could happen in Hong Kong.
Beyond Megvii, artificial intelligence (AI) startup SenseTime Group Ltd. is also reportedly seeking to fundraise. That company, which provides technology for facial recognition to clients in sectors like retail and government, is reportedly in talks to raise roughly $2 billion.
The news comes as Megvii was reportedly raising at least $600 million from investors such as Boyu Capital and Alibaba last year. Per reports last year, the company, which is based in China, already counts one of the country’s largest state-backed venture funds, as well as Jack Ma’s Ant Financial, as investors.
Megvii offers face-scanning systems to companies like Ant Financial and Lenovo Group Ltd. In order to provide this technology, the firm uses facial scans held in a Ministry of Public Security database taken from legal identification files on about 1.3 billion people in China.
In 2017, the firm notched $460 million in venture capital funding, led by a Chinese state-owned venture capital fund and the Russia-China Investment Fund. The latter group is backed by the sovereign wealth funds of China and Russia. Beijing University of Aeronautics and Astronautics Professor Leng Biao said that “investment from the ‘national team’ [state-owned funds] means Face++ will receive much more policy support from the government, which will greatly benefit their development.” However, he noted that “there are risks, too, because national team funding comes with restrictions on who can invest in them in [the] future.”