NEW YORK: Goldman Sachs Group Inc said on Tuesday it was reviewing its involvement in Megvii Technology Ltd’s planned initial public offering after the US government placed the Chinese artificial intelligence firm on a human rights blacklist.
The Trump administration said on Monday that Megvii and seven other Chinese companies were targeted because they were implicated in Beijing’s repression of Muslim minority populations in the Xinjiang Uighur Autonomous Region in the far west of the country.
In an emailed statement in response to a request for comment on the Alibaba-backed Megvii IPO, Goldman said it was “evaluating in light of the recent developments”.
Sources had previously said the listing was scheduled for Hong Kong in the fourth quarter and might raise as much as $1 billion.
Other US companies involved with the blacklisted Chinese firms, whether as investors or as underwriters, are also likely to re-evaluate their relationships, risk consultants and Silicon Valley lawyers said.
Goldman is a joint sponsor of the Megvii IPO, alongside Citigroup Inc and JPMorgan Chase & Co, which both declined to comment.
Megvii declined to comment on Goldman’s statement but added that it was in close contact with the Hong Kong Stock Exchange about its IPO plans and would continue to monitor developments.
Goldman had thoroughly evaluated the Megvii deal before initially signing onto it using its usual due diligence process, a person familiar with the matter said.
Known for its facial recognition platform Face++, Megvii will become the first Chinese AI firm to go public if the deal goes ahead.
The company provides facial recognition and other AI technology to governments and companies including Alibaba, Ant Financial, Lenovo Group Ltd and Huawei.
The US Department of Commerce on Monday barred eight companies, as well as 20 Chinese government entities, from buying US technology without US government approval.
That will include high-powered computer chips made by US companies such as Nvidia, Intel and Qualcomm, which are considered critical for building and operating many AI systems.
The government said the entities were “implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups”.
Megvii said it “strongly objects” to being added to the blacklist and there were “no grounds” for the designation. In a statement, it said around 1 per cent of revenues were derived from Xinjiang in 2018 and none in the six months ended June 30. — Reuters
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