Goldman Sachs Group said Tuesday it was reviewing its involvement in Megvii Technology Ltd's planned initial public offering (IPO) after the USA government placed the Chinese artificial intelligence company on a human rights blacklist.
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.
"We are evaluating in light of the recent developments", the bank said in an emailed statement in response to a request for comment after the Trump Administration moved to ban USA companies from selling technology to 28 Chinese entities, including Megvii.
The U.S. investment bank said on Tuesday it will evaluate its involvement in the Chinese company targeted by the Trump administration seen to be enabling activities contrary to the foreign policy interests of the United States. Goldman, Citigroup, and J.P. Morgan Chase & Co. are joint sponsors of the offering.More news: Intel kills collaboration with AMD on Core processors with Radeon graphics
The company provides facial recognition and other AI technology to governments and firms such as Alibaba, Ant Financial, Lenovo Group, and Huawei Technologies. The US Department of Commerce cited the company's alleged role in facilitating human rights abuses in China's Xinjiang region.
In a statement, Megvii said "there are no grounds" for the company being added to Washington's export blacklist.
The expansion of the blacklist is a blow to some of China's hottest tech startups, especially in artificial intelligence.
The other companies on the list are speech recognition firm iFlytek, surveillance equipment maker Zhejiang Dahua Technology, data recovery firm Xiamen Meiya Pico Information, facial recognition firm Yitu Technology and Yixin Science and Technology.More news: Adventure sets sail in first trailer for Disney's 'Jungle Cruise'
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. Fidelity, the USA mutual fund firm, is also a SenseTime investor, along with Qualcomm.
"MIT will review all existing relationships with organizations added to the U.S. Department of Commerce's Entity List, and modify any interactions, as necessary", a spokeswoman told Bloomberg.
In Hong Kong, sponsors shepherd companies through a listing and conduct due diligence and other functions.
He said that investors and others involved with these Chinese companies "may well be putting themselves at risk". Both JPMorgan and Citi declined comment.More news: EPL: Man Utd getting worse, have only three good players - Michael Owen
"There will be a judgment call as to whether any US investor would want to be associated with such businesses", said Rocky Lee, managing partner of the Silicon Valley office of law firm King & Wood Mallesons.