Goldman Sachs evaluating involvement in Megvii IPO after USA action

Goldman Sachs evaluating involvement in Megvii IPO after USA action”

Megvii IPO sponsor Goldman Sachs Group has made a decision to reconsider its role in the biometrics unicorn's initial public offering, after the Trump administration released this week its Entity List of 28 organizations accused of being involved in human rights violations and abuse, reports Reuters.

The US placed eight Chinese technology giants on a US blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country's far-western region of Xinjiang.

SenseTime said in a statement it was deeply disappointed by the USA move, that it abides by all relevant laws of the jurisdictions in which its operates and that it has been actively developing an AI code of ethics to ensure its technologies are used responsibly. In August, Megvii filed a Hong Kong IPO plan in the hope of raising up to $1 billion in funding.

Citigroup and JPMorgan Chase are also sponsoring the Megvii IPO, however they have not commented on the situation.

Goldman Sachs is reviewing its role in the Megvii IPO after the AI company was added to a United States blacklist of Chinese entities.

The Chinese artificial intelligence company develops facial recognition platform Face++, and provides its services to a number of governments and companies such as Huawei and Lenovo. The US Department of Commerce cited the company's alleged role in facilitating human rights abuses in China's Xinjiang region.

Megvii said it "strongly objects" to being added to the blacklist and there were "no grounds" for the designation.

On Tuesday, the US government imposed visa restrictions on Chinese government and Communist Party officials it believes responsible for the detention or abuse of Muslims in Xinjiang.

Another company on the US government's blacklist, SenseTime, is among the world's most highly valued artificial intelligence firms and counts marquee USA technology investors Tiger Global and Silver Lake Partners among its backers.

As a matter of fact, latest US decision came forth over the heels of yesterday's (October 7th) announcement of US Trade Representative's office of Robert Lighthizer, which blacklisted 28 Chinese companies over same allegations including Chinese video surveillance firm, Hikvision.

In recent years, Chinese and some foreign investors have poured money into startup technology firms that specialise in facial and voice recognition software, as well as other surveillance equipment and software. Fidelity, the US mutual fund firm, is also a SenseTime investor, along with Qualcomm. SenseTime was the first company to be announced by MIT a year ago as part of its Intelligence Quest initiative.

In Hong Kong, sponsors shepherd companies through a listing and conduct due diligence and other functions. Both JPMorgan and Citi declined comment. Dahua said on a conference call it was confident it could easily replace some components and would also seek other solutions to keep servicing clients.

"I believe you will see some "quiet" exiting by US funds and possibly LPs, at least those USA investors who feel strongly that owning companies engaging in these activities are either immoral or politically incorrect".

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