Wednesday, 5 June 2019

HAN CHINESE SCUM RUNNING OUT OF FUNDING - Financial Times

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach ofFT.comT&Csand Copyright Policy. Email licensing@ft.comto buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here
https://www.ft.com/content/35f6d560-873f-11e9-97ea-05ac2431f453

Louise Lucas in Hong Kong 47 MINUTES AGO Print this page0 Megvii, the Chinese facial recognition company backed by Alibaba, is reassessing plans to go to market this year, according to bankers and investors, as the backlash against the sector and broader Sino-US tensions intensify. Megvii was valued at $4bn at its last funding round and hired bankers with a view to launching an initial public offering — at one point targeting as much as $1bn — this year. Since then, however, the ratcheting up of China and US tensions, which has broadened beyond trade to include the tech sector, has soured sentiment. Megvii, China’s second-biggest facial recognition company, has also been ensnared in growing international concerns over Beijing’s use of surveillance of its citizens and is reportedly one of the Chinese companies the Trump administration is considering adding to its export blacklist. Megvii has said it is not aware of being on any US government list, adding that “the current geopolitical climate leads to inaccurate and unhelpful speculation”. “Around Megvii in particular there’s concern about who they are selling to and what the end use of the products is,” said one tech sector banker. “Megvii’s critical vertical is surveillance and security and they earn more revenues from that compared with [rival] SenseTime.” He added that underwriters continued to “work fiercely” on the IPO but “at the very least they will have to go through the grinder with the Hong Kong Stock Exchange . . . because how can you be [suitable] for listing if you are put on the entity list?” The dire performance of China tech companies that listed last year is also weighing on Megvii’s plans. Xiaomi, the smartphone maker that came to market in July with a valuation of $54bn, has seen the price of its stock almost halve while shares in food delivery group Meituan Dianping are some 14 per cent below the IPO price. “Megvii is still thinking about the potential [to IPO] this year, but timing also has to coincide with the right window,” said one investor. Megvii declined to comment. Megvii’s bigger rival SenseTime, which was also a potential IPO candidate this year, is now unlikely to tap markets until next year or even 2021, according to investors and bankers. “SenseTime is in no hurry to IPO and it’s quite profitable,” said one investor. An absence of the two AI groups would leave further dent China tech’s IPO calendar. Early last year, bullish bankers predicted a bulging pipeline headed by three megadeals: ByteDance, the short streaming and news app; Didi Chuxing, the ride-hailing group; and Ant Financial, the world’s most valuable unicorn at $150bn. In addition to some company-specific issues, the US-China trade war has left investors wary. Start-ups are torn between a desire to list, and provide an exit for increasingly antsy investors, and holding back until sentiment swings back. Megvii itself got a taste of the thriftier environment at its last fundraising in May, which was dominated by Chinese state-backed entities rather than the strategic and global financial sponsors that led by far the bulk of deals last year.

No comments:

Post a Comment