Goldman Sachs Reconsiders Part In Megvii IPO Following US Blacklisting

Goldman Sachs
The ticker symbol and logo for Goldman Sachs is displayed on a screen on the floor at the NYSE in New York (Photo: Reuters / Brendan McDermid)

The US' blacklisting of 28 additional Chinese entities has now caused investment banker Goldman Sachs to rethink its position in an upcoming IPO. One of the companies that were added to the US' trade blacklist is the Chinese tech firm Megvii, which recently announced its planned IPO in Hong Kong this year.  

Goldman Sachs was set to be one of the joint sponsors for Megvii's IPO in Hong Kong alongside JPMorgan and Citi. Goldman released a statement this week announcing that it is currently evaluating its role in the company's IPO in light of the recent developments. Both Citi and JPMorgan have yet to release statements in response to the US' blacklisting.

Earlier this week the US Department of Commerce announced that it has included 28 Chinese companies and entities in its trade blacklist. Megvii, a company that primarily designs image recognition and deep-learning software, was included in the list for its alleged role in China's action in the Xinjiang region.

As of this year, Megvii is valued at an estimated $4 billion. Apart from its image recognition and deep-learning systems, the company also provides artificial intelligence technologies for businesses in the public sector. 

The addition of the 28 Chinese entities into the US' trade blacklist has managed to drastically increase the stakes ahead of the scheduled trade talks between China and the United States this week. Apart from the new additions, other Chinese firms that are currently on the list include Chinese tech giant Huawei Technologies.

In response to the recent blacklisting, Megvii mentioned in a statement that the US' actions against it have "no ground." The company added that its operations are in compliance with all laws and regulations in the countries they operate. Megvii clarified that they do not allow their clients to use their technologies for illegal purposes.

China's Foreign Ministry openly criticized the US' recent actions and mentioned that its accusations against the companies and entities were "groundless and senseless." The ministry also stated that the US should halt its interference with the country's internal affairs.

The US' recent action has dealt a big blow to China's tech industry, specifically for companies involved in advanced technologies such as artificial intelligence and big data. Along with Megvii, other tech firms that were recently added to the blacklist include facial recognition startup Sensetime and Yitu. China's largest surveillance systems manufacturer Hikvision was also included on the list along with voice recognition firm iFlyTek.

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