Megvii Technology, backed by Alibaba, is testing investors' appetite for security powered by artificial intelligence just as concerns about facial recognition surface in the protests rocking Hong Kong.

The seven-year-old start-up has filed for a Hong Kong initial public offering and is said to be targeting as much as $1 billion. The filing shed light on its stunning growth, driven primarily by products that help government agencies and other clients improve public safety and optimise traffic management, which it labelled “city IoT solutions”. That business accounted for 73 per cent of its revenues in the first half of the year, the draft prospectus showed.

While Megvii only generated 4.9 per cent of its revenues in the first half of 2019 from outside mainland China, it will still be relying on retail investors in Hong Kong to fill part of its order book, making both the timing and sales pitch of the IPO delicate.

China’s voracious demand for security equipment such as surveillance cameras, voice-recognition technology and big-data analytics has spawned some of the world’s fastest growing start-ups, including Megvii and fellow AI rival SenseTime, while fuelling concerns about the erosion of civil liberties. – Bloomberg