Goldman Sachs Group Inc. is rethinking its role in Megvii Technology Ltd.'s planned initial public offering after the U.S. government placed the Chinese facial recognition software developer on its entity list, Reuters reported, citing an emailed statement.
Goldman, a joint sponsor of the Megvii offering, said it was evaluating its involvement in the IPO "in light of the recent developments." The other joint sponsors, Citigroup Inc. and JPMorgan Chase & Co., reportedly declined to comment.
The news confirms analysts' comments that the U.S. ban will impact Megvii's Hong Kong IPO as investors increasingly take into account environmental, social and governance metrics.
Megvii, which aims to raise at least US$500 million in its public listing, declined to comment on Goldman's statement but said it was in close contact with the Hong Kong Stock Exchange about its IPO plans and would continue to monitor developments.
The U.S. Commerce Department on Oct. 7 added 28 Chinese entities, which includes Megvii, to a trade blacklist over alleged human rights violations against Muslim minority groups in China's Xinjiang Uighur Autonomous Region. Companies and entities on the list are barred from dealing with U.S. companies unless authorized by the government.
